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Analysis: European PTA searched for outlets amid weak domestic market

London — European purified terephthalic acid producers are actively seeking exports opportunities to Asia -- mainly India and China -- amid weak demand in their own region.

European exports of PTA to China totaled 22,992 mt in September, Chinese customs data showed. Exports are typically zero, or negligible at best.

China imported a total of 79,891 mt PTA in September, including 18,045 mt from Belgium and 4,947 mt from Portugal.

Similarly, India imported 9,001 mt of PTA in July from Belgium -- an uncommon source of PTA imports -- and 11,987 mt in August, Indian customs data showed. India's September imports data has not been released yet.

BP is the sole PTA producer in Belgium with a total capacity of 1.4 million mt/year, while there is only one 700,000 mt/year PTA unit in Portugal, owned by Indorama Ventures.

There has been talk in the market that large discounts were offered for PTA from Europe, tempting buying interest from less traditional channels and adding pressure to both the PTA CFR China and CFR India markers.

The European PTA market has been hit by a weak downstream PET market as the low demand season gets into full swing. The cooler months, when there is less demand for plastic beverage bottles, generally leads to less demand and lower prices.

This year, that effect has been exacerbated by poor demand in the summer season leading to significant supply length carrying through to winter months.

As a result, demand for PTA in Europe, to create more virgin PET resin, is low and European PTA producers have been searching for alternative outlets.

European virgin PET spot prices were assessed at Eur890/mt ($989/mt) FD NWE last Wednesday, stable week on week but down Eur460/mt year on year.

Some trade participants have doubted the sustainability of such trade flows due to the packaging and logistics challenges and because market sentiment is generally bearish for Asian PTA amid impending new plant start-ups in the region and waning demand as the traditional year-end slowdown looms.

The PTA CFR China marker was assessed down $5/mt day on day at $625/mt Tuesday, while the CFR India marker fell $13/mt week on week to $637/mt last Friday.

-- Benjamin Brooks, benjamin.brooks@spglobal.com

-- Edited by Dan Lalor, daniel.lalor@spglobal.com