Bottle Grade PET resin price hits 4-year high

Recently, bolstered by hiking crude oil and tight spot supply, bulk discussion for PET spot and near-term goods has breached above intra-year high to 9000-9050yuan/mt, the first time that hiked above 9000yuan/mt since Jan 1 2018. 

So far, China PET bottle chip industry run averages at 84.7% (94.3% if based on designed capacity of 11.71 million tons), which is a flat figure compared with past few years. Factory stock level averages at 10.5 days, way lower from 2020’s 19-20 days and 2021’s 14-15 days. Besides, the epidemic control and plants glitch have caused contract supply reduction, hence market players are a bit worried about the supply in Jun-Aug, which make downstream stock build even more intensive. According to CCFGroup incomplete statistics, large end-user plants restocking volume has reached 150kt in May. Some plants have already restocked part of the contract previously, but to guarantee normal delivery, they still choose to increase purchasing volume to scatter the risk. 

Export price has been rising quickly recently, but oversea buyers don’t quite follow up, hence trading volume is limited. Though shipping schedule has been arranged to Jul-Aug, few to Sep, some customers based in EU and S. America think it not very cost effective to outsource from China, as US dollar has maintained a strong tone and shipping date is long. They mainly purchase from local suppliers. As a result, new export sales growth is limited in China. 

Recently, due to the rapid depreciation of global currencies against the U.S. dollar, many Asian suppliers began to revise down USD quote, from $1350-1400/mt to last week’s $1240-1300/mt FOB, thus the price spread between China and these region narrowed further, offsetting China’s export advantage, and if add shipping cost, China’s export level may be even higher. 

Yet, Europe and the United States, one after another declared force majeure on their acetic acid plants, PX supply shrank, and PTA O/R was poor, as a result, downstream polymerization rate also declined and PET resin supply in United States and Europe tightened. However, beverage plants are in peak season, hence PET resin price is of big chance to rise again. With exchange rate stabilizing, China PET export window may open again in the future.

PET bottle chip value has hiked, but buyers’ acceptance is low, and more players are passively building stock. Only some large beverage plants and traders are purchasing in order to guarantee stable production. Many small-medium customers even begin to sell PET Resin to earn profit. With epidemic situation enhancing, downstream purchases are expected to gradually recover. Rigid demand for PET resin may emerge by then. Export market, due to depreciating RMB against USD, China’s price advantage is reducing. On the other side, PET factories have taken in ample order previously, hence delivery is tolerable. Manufacturers are not in rush to sell. In short term, new export sales may not render much support to domestic sales, but the intensive delivery may still affect market supply.