The world’s largest PET producer is “working very hard” to convert its Q2 increase in spot volumes into contract arrangements to last far beyond the war-related disruptions that necessitated them, executives said during a quarterly earnings call.
Alpek CEO Jorge Young said July 23 that although he expects continued headwinds from global overcapacity in chemicals and polymers, the company is focusing on its position as a local supplier as buyers once again re-evaluate their supply chains.
For example, in key PET markets Alpek can – and has in 2026 – replace “some level of imports,” Young said.
And despite revising its 2026 financial guidance sharply upward, Alpek assumes disruptions from the Iran war will subside throughout the second half of the year, narrowing reference margins and lowering ocean freight rates compared to the second quarter.
| Q2 | H2 expectation | July | |
| Average Chinese PET margins | $307/ton | $170-$200/ton | $215/ton |
| Average PP margins | 20 cents/lb | 17 cents/lb | 20 cents/lb |
| Deep-sea freight China to South America | $225/ton | $120-$170/ton | $268/ton |
The Mexico-headquartered company now expects significantly higher comparable EBITDA of $750 million to $850 million for 2026, versus the previous guidance of $450 million to $550 million.
Disruptions provide relationship potential
During the quarter, Alpek significantly increased spot sales, as customers sought to offset war-related disruptions to contracted volumes from other suppliers, Young said. He added that the company hopes to convert some of those spot customers into longer-term contract clients, and that the Q2 customer mix was both larger and more diverse.
Among all Alpek’s businesses, spot business typically represents about 20% to 30% of sales, but in Q2 that share increased by about 10 percentage points, Young said.
“We have many new names. And we have many current customers that typically buy both spot and contract,” Young said. “We have a great opportunity in front of us to retain this expanded customer base that we have with us now.”
Existing contract customers also increased volumes, “and to an important extent there was some repricing” during the quarter, to reflect soaring prices for feedstocks – in particular crude-oil sourced paraxylene (PX) and its derivative purified terephthalic acid (PTA), which were coming from the Middle East.
Disruption related to the closure of the Strait of Hormuz forced Alpek to turn to alternative supply, Young said, noting that volatile shipping costs for liquids brought further cost increases.
In retrospect, while the war increased commodity pricing and spreads, Young said, for several petrochemicals and polymers, “there was probably an overreaction in March [and] April on [polymer] purchases, expanding margins and volumes significantly.”
And while margins and volumes are yet to rebound, “we’re beginning to see some signs,” even as some Asian countries remain cautious after “learning from the lessons in April of accumulating excessive inventories,” Young said.
Whenever inventories do begin to normalize, renewed buying “could definitely support margins” if the war-related disruptions continue.
Outcome of US trade probes will address market ‘distortions’
Despite the uncertain future of Mexico’s longtime status as a valued US trade ally, Young expressed support for the outcome of two US Trade Representative (USTR) investigations.
Young noted that although at the time of the call, the US had not yet announced a decision on Section 301 tariffs, Alpek expected a continuation of the underlying tariff of 10% on Mexican imports into the US.
Later the same day, the USTR announced that 60 economies including Mexico, Canada and the EU, would be subject to a 10% tariff as of July 24. The current administration alleges that the affected countries and regions have failed to effectively prohibit the use of forced labor practices.
Alpek also is awaiting the outcome of a second USTR investigation, looking at structural overcapacity and production in manufacturing sectors. Young said that although ultimately the investigations aim to provide fair trade conditions for producers in the US, there still is strong domestic competition in the market.
And although he said it’s too early to forecast the impact of the latest round of tariffs, the company expects the tariffs will “address some of the distortions in the markets and bring a fair level of pricing for producers of PET and many other industries.”
Additionally, with the US deciding against renewing the current terms of the US-Mexico-Canada Agreement (USMCA) this month, the trade pact now shifts into an annual review process.
However, Alpek does not expect significant headwinds, because most chemicals made in Mexico use US feedstocks “that are fully compliant with the USMCA requirements and will be fully compliant with the rules of origin. So we expect continuity from USMCA.”
