Polyester bottle chip prices showed overall volatility and weakness this week, with a slight rise followed by a decline within the week in China

June 5th, News

I. This Week’s Price Trend: Overall, prices have been fluctuating and weakening, with a slight upward surge followed by a pullback during the week.

At the start of the week, prices opened between 8,380 and 8,450. During the middle of the week, boosted by a crude oil rally, prices slightly rose to a range of 8,400–8,500. However, prices continued to decline toward the end of the week. The weekly average spot price for the entire week was 8,335, down 0.66% from the previous week. At the weekend, mainstream transaction prices were in the range of 8,250–8,350; actual deals at lower levels were around 8,200. June forward contracts traded at 8,200–8,300 CNY per ton.

Futures (PR2607 main contract) oscillated around 8050 at the beginning of the week, and on June 4th, it plummeted to close at 7488, a significant drop of 2.8% in a single day. Throughout the week, the futures' focus shifted downward, the basis rapidly increased, and the processing fee on the market continued to be compressed.

Export FOB Shanghai prices are at $1,120~1,145 per ton, with stable but slightly weak quotations. Overseas buyers are observing the market, and the negotiation space for large orders has expanded.

II. Breakdown of Core Fundamentals

1. Cost side: Geopolitical disruptions in crude oil, but limited support for PTA and ethylene glycol.

Crude Oil: Geopolitical tensions between the U.S. and Iran continue to fluctuate, causing oil prices to swing widely. Although prices briefly surged, downstream polyester demand has been sluggish, and the sustained upward momentum driven by costs remains weak.

PTA: Spot prices slightly increased (6300+), supported by expectations of production cuts and inventory reduction, but the overall operating rate of the polyester industry in China is low, and the high cost of raw materials is difficult to pass on. The increase in the cost of bottle-grade raw materials is less than the decline in quotes.

Ethylene glycol: Spot prices are 4,610-4,630 CNY/ton. Port inventory is slowly decreasing, but the expectation of resuming production at coal-based plants is suppressing price increases. Overall, the cost side is a mix of bullish and bearish factors, with weakening support.

2. Supply side: With plants resuming production and new capacity coming online, supply is gradually becoming more abundant.

The industry average operating rate is around 72.8%. Earlier-maintained units are gradually resuming operations, with Shaoxing Tiansheng’s new 200,000-ton capacity coming online step by step and Yipu’s 120,000-ton unit running at full capacity. As a result, China’s commodity supply is showing an upward trend.

Factory inventories have been gradually rising from low levels, with current available days of inventory at 9.45 days (up 0.94 days from the previous month). The logic of tight supply is gradually easing, and the leading companies’ efforts to control production are weakening marginally.

Exports continue to be underpinned by solid underlying demand (January-April exports up 2.2% year-on-year), but slowing overseas demand and limited growth in new orders make it difficult to fully absorb China’s increased supply.

3. Demand side: Beverage demand is rigid and stable during the peak season, but high prices inhibit concentrated restocking in China.

China's soft drinks are in the traditional peak season for production and sales. Large factories regularly purchase raw materials on a monthly basis to meet their rigid demand, without engaging in concentrated stockpiling. Small and medium-sized packaging factories make small-scale purchases based on their needs and wait for price drops to replenish their inventories. Market transactions are mainly driven by sporadic orders to meet immediate needs, with large-scale restocking yet to occur.

4. Profit: Processing fees have fallen from high levels, narrowing production profits.

This week, the theoretical processing fee for bottle chips dropped from above 1,000 CNY per ton to around 950 CNY per ton, leading to a reduction in factory profits. Some small factories with higher costs have shown a slight intention to reduce production, but the leading enterprises, due to decent export orders, have no plans for large-scale shutdowns. III. Market forecast for next week (June 6-12)

Price range: The spot market in East China is fluctuating within a range of 7,950 to 8,350 CNY/ton, with the weekly average price likely shifting downward to around 8,200 CNY/ton. In the futures market, PR2607 is trading in a volatile range of 7,300 to 7,900 CNY/ton.

Trend Logic:

Negative factors: Supply continues to increase, downstream demand lacks concentrated restocking, and the cost side lacks sustained upward momentum, leaving room for further compression in processing fees.

Positive factors: Seasonal demand for beverages provides a solid foundation, and exports offer additional support; thus, there’s limited room for a deep dive in prices, and the low levels provide support for bargain-hunting and restocking.

Overall direction: Weak oscillation, sharp declines are unlikely to continue, with repeated bottoming at low levels. After a price correction, it may stimulate some downstream sectors in China to replenish inventories at lower prices, leading to a phased rebound.