PET bottle chip marked loss leads to a spate of shutdown – ChinaTexnet.com
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PET bottle chip marked loss leads to a spate of shutdown

2018-09-12 09:02:32 CCFGroup

PET bottle chip is now facing 300yuan/mt loss. Processing spread of PET resin is merely 300-400yuan/mt in Sept, far less than supporting normal operation. A spate of production cut is to arrive this week.

According to CCFGroup statistics, China PET bottle chip operating rate averaged at 76.9% till Sep 10, dropping nearly 15% from 91.5% end-Jul. China Resources (Changzhou), Sinopec and Far Eastern are to cut back output this week and Baosheng may shut down. Concerning recent turnaround schedules, PET bottle chip O/R might approach 70% late Sep, with daily output reduction assessed at 8000mt theoretically.

However, PFY plants are running around 95%, output cut of PET bottle chip factories might not lower much of polymerization rate, nor will it shake the strength in polyester feedstock. But we could see that PET bottle chip market is stuck in a quite bad situation, as some plants even started to sell PTA since end-Aug, to recover part of the loss. This could explain why some plants still sell at relatively low prices while some need to slash output.

Later, if PFY profit maintains high and still not many plants are to turnaround, while feedstock supply tightness sustains, PET bottle chip will face more sales pressure during slack season in Sep-Oct. Cost advantage in export will also vanish. Actually, export order intake has been declining since Aug.

PET bottle chip producers generally sold materials in advance, hence despite the rapid rise in raw materials, average cost didn't raise as much as the spot soar. Impact on Aug order margin is still limited. Some plants have lifted turnaround schedule ahead to battle against a rainy day, but in the long run, PET resin units without integrated feedstock lines are bound to lower O/R or shut down directly.

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