Latin American resin trading has been dragged                    down by an environment of tension that emerged                    during the third and fourth quarters of 2019.                    Economic and political difficulties in several                    countries will contribute to a cautious outlook                    for the first quarter of 2020.

Political events have severely impacted on                    local economies. This has led to demonstrations                    and civil unrest, hampering any hope of a                    significant improvement in the near future -                    despite the warmer weather.

The sluggishness in the PET resin market has                    also persisted in North America and Asia,                    contributing to a downward price trend across                    the globe. This has been more obvious in Asia -                    and China in particular - resulting in                    consistently softer offshore offers in Latin                    America.

Latin American resin prices have traditionally                    tracked the price trend in Asia, but with a                    slight delay. However, in countries where                    import volumes are significant or there is no                    domestic production, Asia price trends are felt                    immediately as import prices set the market                    price as product enters these countries.

As demand for Asian PET softened further with                    the onset of the seasonal lull there, offers                    from Asia proliferated in non-producing                    countries in Central and South America.

There is, however, little offshore product                    entering PET-producing countries such as                    Mexico, Argentina and Brazil. This allows for                    more stable pricing in those countries -                    despite the modest demand levels seen.

Market fundamentals in Mercosur are expected to                    remain sluggish as weaker Asian prices set the                    tone for resin values. In addition, the                    depressed Argentinian economy continues to                    impact on business in neighbouring countries.

Although the market in Brazil has been slower                    than expected, sales volumes have been                    improving.

Market conditions in Mexico are sluggish,                    impacted by the soft demand conditions seen in                    the US.

In Colombia and other countries along the                    Pacific coast of South America, mixed pricing                    is at the forefront, highlighting the diverse                    offshore offers received.

Since the third quarter of 2018, international                    PET prices have come under downward pressure                    due to the economic slowdown stemming from the                    US-China trade war. This has resulted in                    abundant supply and weak demand.

Despite optimistic gross domestic product (GDP)                    growth projections of 3% and more for some                    Latin American countries, resin participants                    remain cautious because of the precarious                    economic and political state of several                    countries in the region.

In its World Economic Outlook in October 2019,                    the International Monetary Fund (IMF) published                    its gross domestic product (GDP) growth                    projections by country.

The soft market conditions seen across the                    Americas during the last quarter of 2019 are                    likely to linger in the first quarter of 2020.

PET resins can be broadly classified into                    bottle, fibre or film grade, named according to                    the downstream applications. Bottle grade resin                    is the most commonly traded form of PET resin                    and it is used in bottle and container                    packaging through blow molding and                    thermoforming. Fibre grade resin goes into                    making polyester fibre, while film grade resin                    is used in electrical and flexible packaging                    applications.

PET can be compounded with glass fibre for the                    production of engineering plastics.

DAK Americas, Mossi & Ghisolfi and Indorama                    are PET producers in the Americas.

Focus article by Luly Stephens