- Most producers and traders mulled a round of price increase on a weekly basis
- Demand stayed on an upward trajectory, supported by traditional peak season
- Export demand is projected to increase as lockdown eases globally
China’s PET Bottle prices have gained ground, finding support from peak consumption season and backed by tight availability of spot domestic cargoes amid striking demand. During the month, a large number of Chinese producers and traders maintained their high price quotes to the domestic and export market. In the week commencing May 4, local producers announced increases of CNY200/ton ($28/ton) for PET Bottle resins from last week’s level in response to the upswings in monomer costs. Similarly, some producers initiated a price increase of between $5-20/ton to the export market, while others kept offer levels unchanged from a week earlier due mainly to a large drop in demand in export destination countries driven by the pandemic crisis. In the following week, most producers applied a price increase of CNY50/ton ($7/ton) for local PET Bottle cargoes on the back of healthy demand and rising monomer costs, while traders kept their offer levels on hold from the previous week. As compared to the same period last year, overall downstream consumption in South China and East China market have shrunk due to the fallout from the coronavirus pandemic, which led to a narrowing of the current wide price gap between the two markets.
Moving to the third week, local PET prices in China have held firm on higher monomer costs. On a week-to-week basis, local PET Bottle prices edged up CNY200/ton ($28/ton), holding firm on the back of rising monomer prices. Meanwhile, export prices on a free-on-board (FOB) China basis were up by $5-30/ton over the same period. In the final week of May, a Chinese producer instituted a price increase of CNY100/ton ($14/ton) for local PET Bottle cargoes in the wake of rising domestic demand and firmer monomer costs, while others maintained their offers stable from last week’s level. In contrast, most export prices hold steady from last week, while a producer made the decision to adjust downward their export offers by $5/ton on a weekly comparison to match competitive offers from other suppliers. Export demand was slightly improving this week, but still below market expectation.
China PET market faces immense upward pressure in May amid tightening supply as the market is now heading into the traditional peak demand season of the year, with beverage-bottle sales accounting for a major chunk of PET sales. According to sources, some buyers are withholding their cargo purchases in anticipation of greater fall in prices, while some traders are unwilling to lower their offers due to supply limitation. However, most buyers started to secure and stock up some volume in anticipation of a further price increase in the near term. During the month, a local producer has reportedly sold out all allocations for July delivery and started offering materials for August delivery. In contrast, China’s export markets have not yet strengthened, especially for end-products as the pandemic crisis continued to roil markets and upend business around the world. Most Chinese producers have reduced export allocations to 20-30% amid the Coronavirus pandemic. Under the normal market condition, producers’ allocation for the export market is around 40-50%.
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 taken its two PET lines off-stream since April 23 due to technical issues. According to sources, the plant with a capacity of 600,000 tons/year remains off-line for maintenance. Similarly, China Far Eastern Industries said the company has carried out repairs to its PET plant following a fire in mid-April. Due to this explosion, the plant was taken off-line for one-and-a-half months maintenance.
Looking ahead, market participants in China foresee that local prices are likely to remain stable to firmer in June on the back of higher feedstock prices and growing buying activity amid the traditional peak demand season. Meanwhile, export demand is projected to increase in June as more countries have gradually lifted lockdown measures.
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