PET Resin Market Sentiment Weakens

PET bottle chip market sentiment weakened rapidly as demand is flattening and PET price fell consecutively, tracking feedstock trend, due to slumping crude oil and new PET capacity launch, meanwhile, shut unit abroad has restart expectation.

Mainstream traded price for PET bottle chip with large customers gradually breached above 10000yuan/mt since late May, while recently, some plants even sold at below 9900yuan/mt by cash EXW. However, traders almost sold out low-priced stocks and had to refill at low rates from producers. Hence, PET resin price was stagnated in Jun, while low priced orders emerged now and then within small customer range. Under abundant profits, it’s understandable that some producers offered discounts, concerning half year fund withdrawal issue and bearish market outlook. At the meantime, this has bothered small-medium clients or traders. On one side, delivery of some spec do tightened, especially when some plants in Jiangsu cut back output due to environmental protection inspection, negotiable space is not much for them. On the other, despite weak opinions held, traders with scarce stock built didn't get the same low price as PET resin producers signed to downstream plants. Export price however maintained firm since some overseas units were shut or cut down production in May-Jun. Price level differed by month. Though m-o-m export volume reduced, y-o-y exports increase is remarkable.

According to Customs statistics, China PET chip export volume totaled 1.278 million tons in Jan-May 2018, growing 41.6% on annual basis, including 140kt for HS code 39076910, rising 0.65 on year, and 1.14 million tons140kt for HS code 39076110, up 50.7% from a year earlier. Based on CCFGroup order intake statistics, PET bottle chip export order intake was around 1.21 million tons during Jan-May, growing 33% comparing with a year ago. Particularly Mar-May, monthly average order intake maintained above 250kt.

So we hold the same view, delivery remains to be market focus end Jun-early Jul as both export and China domestic market will face an intensive delivery cycle. Hence price may be difficult to fall.

In Q3, overseas unit restart will become new market focus. Except for the plants mentioned in Why PET bottle chip turnover tends thin while price firm, EIPET is expected to restart in Jul after shut for years as IVL announced to acquire it. Overall, output increase may reach 2 million tons in Jul-Aug in foreign market. Theoretically, this figure is to gradually fill the gap generated from last year’s units closure in Q4. Plus new capacity release in China, overheated PET bottle chip market is poised to cool slowly(not concerning later on maintenance plans).