Based on an article by Caroline Murray, senior editor at ICIS
The global polyethylene terephthalate (PET) market entered 2026 with persistently weak demand, volatile freight rates and intensified import competition in most regions. Market sentiment is now shaped more by seasonal factors and speculative activity than by classic fundamentals such as stable end-user demand or predictable feedstock costs. Producers in many countries are struggling to significantly increase operating rates, while trade flows are undergoing further reshuffling as buyers focus on securing the cheapest supply source.
In this environment, the market increasingly depends on the calendar of seasonal events such as Ramadan, the Lunar New Year period, the peak of beverage demand in the summer months and scheduled paraxylene (PX) shutdowns in the second quarter to determine price and margin direction. However, conditions differ between regions: Europe remains structurally the weakest link, Asia reacts most strongly to speculative signals and both Americas show only moderate signs of recovery amid a cautious stance among market participants.
Middle East: seasonal slowdown in activity
In the Middle East, including the Gulf Cooperation Council (GCC) countries, PET market activity is expected to remain muted at least until mid-March. This is due to the overlap of Ramadan with the post-Lunar New Year slowdown in Asia, which reduces buying appetite and weakens trading visibility.
Buyers in GCC countries who needed to replenish stocks have largely already done so, which lowers the pressure to quickly secure additional volumes. The price competitiveness of individual import origins remains volatile. Indian-origin material briefly gained a cost advantage, but lower freight rates for shipments from China restored the competitiveness of Chinese cargoes on Middle Eastern markets.
Trade in PET from China traditionally slows during the holiday period, further reinforcing the moderate pace of transactions. As a result, the region operates in a low-activity environment, with a limited number of spot deals and a cautious approach by buyers to larger volume commitments.
Asia: speculation outweighing fundamentals
Asia remains the segment of the global PET market most exposed to speculative influences. In early February, significant price volatility was observed in key feedstocks in the value chain, in particular purified terephthalic acid (PTA) and paraxylene (PX). These movements later stabilised, but current price fluctuations still mainly reflect sentiment on the futures market rather than the real strength of demand in the packaging and textile sectors.
PX-naphtha spreads have fallen below 300 USD per tonne, which limits the scope for further cost increases on the feedstock side. At the same time, demand fundamentals remain weak. Beverage bottle demand softened ahead of the holiday period, and operating rates in the Chinese PET packaging sector fell by 5–8% week on week. The polyester fibre market is further constrained by uncertainty over textile exports to the United States.
Producers of polyester staple fibre across the chain are operating at unusually low rates from late January through late March. A limited number of new PTA units and the second-quarter PX turnaround season, which is already largely priced into futures, may weaken the typical seasonal upturn in this period.
Reports of a possible naphtha consumption tax in China have emerged, but such a measure is expected to have only a limited impact on the PET market balance. Market participants anticipate some demand improvement after the holiday break, provided that tourism and catering activity remains robust.
United States: quiet market and moderate summer optimism
Fundamental conditions on the PET market in the United States at the beginning of 2026 have remained largely unchanged. Some participants point to paraxylene as a potential source of upward pressure on prices, but this has not yet translated into a clear shift in pricing relationships along the feedstock chain.
Winter weather on the US East Coast did not disrupt operations at major producers, meaning that domestic supply remained stable. As a result, an unusual price inversion has occurred in which domestic PET values have slipped below import prices. This situation is driven by higher freight costs and ongoing discussions about possible tariffs on supplies from South Korea.
Most market participants, however, view the tariff narrative mainly as part of a political debate rather than a decisive factor shaping trading conditions. In the coming months, expectations are focused on a gradual, seasonal recovery in demand during the summer peak in beverage consumption, without the sharp demand spikes seen in some previous years.
Latin America: changing trade routes
In Latin America, January brought a slight strengthening of PET demand, with further improvement expected towards March. Volumes nevertheless remain below historical norms, forcing producers to maintain an aggressive pricing stance.
In response to oversupply, suppliers continue to match competing offers with significant price flexibility. Trade flows in the region are undergoing marked changes. Argentina has seen rising imports from China, while in Mexico volumes have increasingly been redirected towards supplies from Malaysia and Vietnam. Brazil, which previously relied heavily on deliveries from Southeast Asia, increased purchases of Turkish-origin material in the first months of 2026.
Disruptions in maritime transport remain an important driver. Freight market distortions periodically decouple regional prices from levels observed in Asia. Following price moves in China in January, some Latin American countries recorded short-term increases, but a gentle downward trend is expected for later in the year.
Higher beverage taxes in Mexico have so far not led to the significant demand losses some market participants had feared. This indicates a degree of resilience in consumption in this segment, although the longer-term impact of fiscal measures will continue to be monitored.
Europe: PET industry under structural pressure
Europe remains the region with the weakest structural position in the global PET chain. End-user demand in 2026 is expected to mirror the weak levels recorded in the previous year. Market participants point out that any sudden shortage of supply caused by delays in PET or upstream imports, technical failures or further output cuts at European plants could trigger accelerated procurement activity as customers rush to secure available volumes.
Several sites are still running below economically efficient rates, reflecting a combination of high production costs and increasing exposure to import competition from other regions. While trying to adjust prices and sales strategies to feedstock developments, suppliers in practice engage in individual competitive battles with imports and in many cases have managed to win back some buyers to local sourcing.
The overall picture for the sector remains negative, and several producers are described as fighting for survival. Persistent cost pressure, limited utilisation of capacity and uncertainty over the long-term shape of trade and regulatory policy in Europe mean that investment and production decisions in the region are taken with considerable caution.
Conclusions: market driven by seasonality and trade flows
Across all major geographic regions, the PET market enters 2026 with fragile demand, shifting trade routes and significant sensitivity to seasonal factors. Ramadan, the Lunar New Year, the summer peak in beverage demand and scheduled PX shutdowns in the second quarter will be key reference points for purchasing decisions and pricing strategies in the coming months.
The most serious structural challenges are concentrated in Europe, where part of the installed capacity is operating on the edge of profitability. Asia remains strongly influenced by futures markets and speculative activity, often disconnected from current end-use demand. North and Latin America show some signs of resilience, but the overall trading backdrop remains cautious and defensive.
Key applications and PET grade classifications
PET resins can broadly be divided into three main classes: bottle, fibre and film grades, reflecting their principal end-use applications. Bottle-grade resin is the most commonly traded form on the international market and is used to manufacture bottles and container packaging using stretch blow moulding and thermoforming technologies.
Fibre-grade resin is used in the production of polyester fibres for the textile and technical sectors, while film-grade resin is applied in electrical applications and flexible packaging. PET can also be modified by compounding with glass fibre to produce engineering plastics with enhanced mechanical properties, which extends the range of applications for this polymer beyond conventional packaging.
