June 16 news
In the early hours of June 15, local time, Iran’s Foreign Ministry officially announced that, after months of protracted negotiations, Iran and the United States have finalized the full text of a memorandum of understanding, marking the formal implementation of a peace agreement. The document, known as the "Islamabad Memorandum," will be signed by the three parties this Friday, June 19, in Switzerland, with Pakistan serving as the coordinating mediator and jointly witnessing the signing. After being effectively restricted and partially closed for three and a half months, the Strait of Hormuz—the lifeline of global energy supplies—has now re-opened to navigation, with a clear timetable now in place. As a result, both the energy market and the polyester industry chain are experiencing intense volatility simultaneously.
I. Core Provisions of the Tripartite Agreement: 60-day Transition Period, Full Navigation Across the Strait, and U.S. Easing of Sanctions on Iran
This agreement has been jointly confirmed by the United States, Iran, and Pakistan. It includes a 60-day transition period as a buffer to create favorable conditions for subsequent comprehensive and in-depth negotiations. The core binding provisions are clearly defined:
1. A permanent, nationwide ceasefire—immediately ending all military conflicts along all frontlines in Lebanon and other countries along the Middle East region;
2. The Strait of Hormuz will be opened to navigation without discrimination, allowing all types of commercial vessels worldwide to pass freely and lifting previous navigation restrictions.
3. The U.S. side lifted the blockade measures on Iranian ports and simultaneously introduced multiple batches of sanction exemption policies targeting Iran's energy trade.
II. Rapid Market Reaction: Crude oil plunges 4%, and spot prices for PET bottle flakes fall below 8,000 CNY/ton; spot data shows a simultaneous weakening trend.
Following the release of the news, during the morning session on June 15, international bulk commodities and Chinese chemical products all showed significant fluctuations across the board, as market risk aversion rapidly subsided: During trading, the largest intraday price decline for international crude oil expanded to 7%, with the overall closing price down by more than 4%. Brent crude oil even broke through the key $80-per-barrel mark. At the same time, risk assets such as gold, silver, U.S. stock index futures, and cryptocurrencies all strengthened simultaneously, while risk-averse capital sharply flowed out of the crude oil market.
The impact has been transmitted to China's polyester industry chain, with the cost collapse effect being quickly realized. In the futures market, the main PET bottle chip contract plummeted by more than 5% in early trading. According to price data, the spot quotations for PET bottle chips in East China show that the mainstream negotiation prices have also significantly decreased. The spot prices have directly fallen below the 8,000 CNY/ton mark, dropping by several hundred yuan compared to the average price of the previous trading day, indicating a concentrated release of pessimistic sentiment in the industry chain.
III. The Underlying Logic Behind the Price Decline: Geopolitical Premiums Are Being Cleared, and Expectations of a Raw Material Supply Gap Have Been Completely Reversed.
1. Middle East geopolitical risk premium rapidly stripped away
The geopolitical premium—previously underpinning and propping up international oil prices and driving up the costs of polyester feedstock—that stemmed from the Middle East conflict has been rapidly unwound now that the peace agreement has taken effect. As a result, the market no longer needs to pay an additional risk premium for disruptions to shipping through the strait or for obstacles in crude oil transportation, and crude oil pricing has returned to fundamentals driven by supply and demand.
2. The logic of PX and PTA raw material shortages in China has been thoroughly shaken.
Long-term tracking data show that, prior to the agreement taking effect, the utilization rate of PX facilities in Asia had been persistently low, hovering around 64%-65% in recent years. The market generally worries that disruptions in the transportation of Middle Eastern crude oil and aromatics could lead to a supply shortage of raw materials, which has become the core driver behind the continued destocking of PX and PTA and the sustained strength of their prices.
With the resumption of navigation through the Strait of Hormuz, the Middle East’s crude oil and aromatics supply chain is expected to recover in an orderly manner within a few weeks, completely reversing the long-term market expectation of a severe raw-material supply gap. As the current concentrated maintenance period for PTA comes to an end, factories’ willingness to resume operations will significantly increase, further narrowing the medium- and long-term raw-material supply gap and continuously weakening cost support for PET bottle flakes.
IV. Both domestic and international factors are simultaneously weakening the supply-and-demand fundamentals of bottle flakes, amplifying the downward trend.
The decline in crude oil prices is merely an external trigger for the price drop; the core internal factor behind the sustained weakening of market conditions lies in the shift of the supply-demand balance of PET bottle flakes—from tight to loose. This can be clearly confirmed by examining monitoring data from the polyester industry chain:
Supply side: Capacity is steadily being released, and inventories continue to accumulate.
The current overall capacity utilization rate of PET bottle chips in China has rebounded from a previous low of 71% to 71.9%; multiple sets of previously shut-down maintenance facilities have restarted, and the 200,000 tons of new capacity from Shaoxing Tiansheng continues to ramp up. Inventory data shows that the number of days of finished goods inventory at bottle chip factories has risen from extremely low levels at the end of April to more than 9 days, with supply pressure gradually becoming evident. If the transportation of raw materials from the Middle East is fully restored, and after the maintenance season ends, the industry's operating rate may further increase, with continued release of additional supply.
Demand side: The traditional peak season has fallen short of expectations, and downstream inventory replenishment momentum is weak.
The soft drink industry, despite having rigid procurement needs, has seen its profits suppressed by high raw material costs in the past. Downstream manufacturers generally purchase according to their needs, and there is a lack of large-scale, concentrated restocking. Overall, the market demand shows a trend of weak performance during the peak season. By mid-to-late June, it is highly likely that the demand load for polyester will reach a turning point. Additionally, with the easing of tensions between Iran and the United States, the circulation of overseas goods has improved, challenging the price competitiveness and sustainability of China's bottle chip export orders. Both domestic and international demand are under pressure. Overall, the weakening of international crude oil prices is an external downward force, while the loose supply and demand in the industry is an internal suppressive factor. Under the dual impact of these negative factors, the price decrease of PET bottle chips may continue to exceed that of the upstream PX and PTA raw materials.
V. Post-Market Trend Forecast: The 8,000 yuan level has shifted from support to strong resistance, and the price center of gravity continues to move downward.
Combining the trends in spot prices, supply-and-demand data across the industrial chain, and changes in geopolitical policies, the PET bottle flake market can be broadly divided into two phases:
In the short term—1 to 2 weeks—the market will likely experience weak, oscillating price movements driven primarily by sentiment. The negative sentiment triggered by the peace agreement will be concentratedly released within the 7,800–8,000 CNY/ton range, making it difficult for crude oil prices to stage a significant rebound in the short term. If the agreement is smoothly implemented, risk-averse capital will flow back into precious metals, putting continued downward pressure on crude oil prices. Correspondingly, in the spot market for PET bottle flakes, the 8,000-yuan mark has fully shifted from being a strong previous support level to a key resistance level above. As a result, prices are highly likely to remain weakly confined within the 7,800–8,000 CNY/ton range, and spot quotes may continue to hover around the lower end of this range.
Mid-term (1–2 months): Fundamentals will be repriced, and three key variables will determine the extent of the downward adjustment. Market pricing logic will shift away from geopolitical conflicts and return to the supply-demand dynamics within the polyester industry chain itself. The following three points will be critical for monitoring market trends going forward: the actual pace of recovery in the Middle East aromatics and crude oil supply chains; the resumption and commissioning schedule of the industry following the completion of PTA maintenance; and whether downstream sectors enter a concentrated inventory-replenishment window at the tail end of the traditional peak season for beverages.
The implementation of the Iran-US peace agreement marks the official end of the "geopolitical premium bull market" that has supported the energy and polyester markets for months. Currently, PET bottle chips are facing a double negative environment with continuously weakening cost support and a shift from tight to loose supply and demand. Spot monitoring data confirms that the 8,000 yuan threshold has been effectively breached. The market will move away from geopolitical speculation and re-anchor a reasonable price range based on actual supply and demand. Short-term downward pressure still exists.
