Sellers managed to avoid big decreases seen in other markets amid an already weakened market.
Polybutylene Terephthalate (PBT) prices in Europe decreased €30-35/mt from Q2 to Q3, according to GC Intelligence price assessments.
The level of decreases for PBT in Q3 were relatively small compared to the losses seen in other polymer markets. For example, during the quarter some PA66 grades lost more than €300/mt.
However, this is linked to the fact that PBT prices were already very low before the pandemic. At the same time, PA66 prices were on the way down from the highs reached in 2018.
Lower costs increased margins.
What is more, lower costs meant PBT producers experienced a significant increase in margins. The two main feedstocks, butanediol (BDO) and terephthalic acid (PTA), experienced significant decreases in prices lately.
But even if margins increased for PBT producers, overall profits most likely are down because of the substantial loss in volumes. The auto sector which has suffered considerably during the pandemic represents around 45% of total PBT demand.
Another reason that can explain why PBT prices in Europe did not post bigger decreases in line with costs is because many sellers offer the polymer as part of a bundle. Therefore, when a polymer such as nylon falls considerably, the seller has some leverage to limit the losses in other products in the portfolio.
Some positive signs are emerging.
The market continues to suffer in July but as economic activity increases, signs are emerging that PBT demand is picking up. Compounders and end users are understood to have increased operations, even if these remain 20-30% below last year’s levels. Nevertheless, it is a step in the right direction.
As stocks continue to fall in the summer, September could see the start of a recovery that will at least stop the ongoing decreases in prices and margins.
The market is currently too weak to support a forecast of price increases at any time this year. More evidence is needed that would signal that a stronger than expected demand recovery is on the way. For instance, higher PBT sales volumes would need to match more closely the recovery in auto sales.