- Local offers captured on a stabe to firmer trend
- Export customers expressed buy idea between $20-60/ton lower
- Blast occurred at Far Eastern China Industries PET plant, China's Ningbo Liwan PTA plant
China PET market faces upward pressure in April amid tightening supply ahead of traditional peak season. During the month, most producers and traders mulled a round of price increase. In the week commencing April 6, local producers have separately announced increases of between CNY50-500/ton ($7-70/ton) from last week, citing rising monomer costs. Similarly, some producers have instituted a price increase of between $5-40/ton to the export market during the same time frame. In the following week, the majority of Chinese suppliers maintained their high price quotes to the domestic and export market. On a week-to-week basis, local PET Bottle prices edged up between CNY150-200/ton ($21-28/ton), holding firm on the back of healthy demand and higher monomer costs. Meanwhile, export prices on a free-on-board (FOB) China basis were up by $5-10/ton over the same period. However, most export customers were reluctant to purchase at higher prices as the coronavirus pandemic continued to roil markets and upend business around the world; hence, expressing buy ideas at $20-60/ton lower than the initial offers on the low-end price range.
Moving to the third week, local PET prices in China hold steady amid tight supply. In the particular week, most local producers maintained a stable offer level as compared to last week’s level. Similarly, a producer rolled over export offers from last week, while a distributor revised down the offers between $10-15/ton on the high-end level of the price range. On April 28, one of the Chinese PET producers made a decision to lower their offers by CNY100/ton ($14/ton) in line with downtrend in monomer prices. However, on April 30, another PET producer initiated an upward adjustment on their offers to the local market by CNY100/ton ($14/ton) after monomer prices showed some rebound. All offers are compared to last week. To the export market, several Chinese producers kept the offer level unchanged from last week.
As summer approaches, China is entering peak consumption season, with beverage-bottle sales accounting for a major chunk of PET sales, leading to a significant increase in demand for raw materials. As a result, most suppliers and downstream factories faced short supply as demand builds leading to summer, when beverage-bottle consumption peaks. However, during the month, China posted lower PET sales compared with the same period last year since most buyers are reluctant to purchase in bulk as crude oil prices remain stuck on record lows and Coronavirus sparked fears of a global recession. On the production sector, since the market activity is back to normal in many parts of the country as disruptions from the outbreak faded, some producers started running at full swing since early April, while downstream factories were mostly running around 70-75% from the normal production capacity.
On the plant news, SSESSMENTS.COM demand and supply database noted that Jiangyin Chengold Packaging Materials Co Ltd, a subsidiary of Jiangyin Chengxing Group, has shut its two PET lines with each a capacity of 600,000 tons/year since April 23 due to technical issues. According to sources, the plant will be brought on stream in May. On April 17, a major fire broke out at China Far Eastern Industries. The company’s PET plant with a production capacity of 400,000 tons/year was affected by the blast. Due to this explosion, the plant will be shut for one and a half months. Market talks have it that a fire broke out at China's Ningbo Liwan PTA plant on April 30, which led to a shutdown of the 720,000 tons/year plant. Sources in China pointed out that this incident could affect the supply-demand balance across the PX-PTA chain and potentially affect PTA market sentiment this week, even though the production loss from the incident would exert minor influence on the current oversupplied market.
Looking ahead, market participants in China have mixed views on PET price outlook. Some sources expect local PET prices to move lower after peak season ends in June. However, others voiced out to SSESSMENTS.COM that China's PET prices will remain stable in the near term, backed by tight availability of spot domestic cargoes amid striking demand.
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