PET resin supply may tighten further with to be delivered exports approaching 800kt

According to CCFGroup statistics, China PET bottle chip export order intake hit historical high in Q4 2021, at 1.08 million tons, hiking 56.5% compared with a year earlier. This is the highest quarterly figure ever since PET bottle chip started export sales. If you calculate this round of rise from the end of August and the beginning of September, the total export order intake from September to December reached a staggering 1.49 million tons, equivalent to nearly 60% of annual exports in 2020.

In fact, after intensive transaction in Sep-Oct, overseas customers have been "silent" for a while near the end of the year, hence around early Dec, some industry customers thought the export boom had finished this round. However, driven by expectations of rising sea freight charges in 2022 and persistent shortages in overseas supply, orders from Europe and the United States before Christmas were unexpectedly good, mostly to be delivered in Q1, to ensure stable production. As a result, PET bottle chip export order intake reached 380000 tons again in December, historical high for the same period in December.

In terms of 2021 delivery, it is necessary to look at the delivery condition in 2-3 months, as the export data of a single month cannot fully reflect the sales situation of that month. Since export delivery volume in Oct-Nov totaled around 710000 tons, while export order intake from Sep-Dec was 1.49 million tons, hence there is still 780kt to be delivered. It means that export proportion of total output in Q1 2022 is expected to maintain or slightly surpass 40%, forming a strong support for domestic sales.

So far as we know, shipping schedule of mainstream PET bottle chip factories mostly tends to April--May, and only few factories still offer Q1 goods. Besides, large downstream factories have purchased 800,000 tons PET resin for the first half of 2022 in advance. At present, the bottle chip factories have at least sold 1.6 million tons materials apart from the annual contract volume, and spot goods may be difficult to obtain for a period of time in the future. We’ve mentioned it before, that the extra sales is expected to sustain at 200,000-300,000 tons per month in the first quarter of 2022.

In addition to the supply tightness, players shall also pay attention to the output reduction and shutdown of domestic plants. In Jan, China Resources Changzhou keeps shut for turnaround, and the line plans to restart early Feb, but may delay to after mid-Feb. Wankai Chongqing also delays launching time, with news heard in Mar, which originally planned to commence pre-China Lunar New Year holiday. Hence during this period of time, if plants intensively deliver export orders, domestic pickup may not likely to be fulfilled in time. Or if PET producers incline to first deliver to large end-user plants, the contract fulfillment with traders may also be difficult. Then in the later stage, if some unexpected macro factors emerge, the concentrated replenishment of traders may occur again.