- Several factors dragged down local and export PET Bottle prices
- Overall demand for PET resins was on the downtrend
- Downtrend in PET demand and prices expected to prolong
Based on the data collected by SSESSMENTS.COM, several factors negatively affected local and export Chine PET prices during Q1 2020. In January, offers for local PET Bottle in the China market were relatively stable. A local PET producer tried to make an upward price adjustment of CNY100/ton ($14/ton) in the second week of January. However, the producer had to adjust down the offers by the same amount in the same week due to the sudden decline in crude oil prices. While in February and March, Chinese PET producers were under pressure to lower the offers due to the extended holiday amid Coronavirus outbreak. Surprisingly, on the week commencing February 17, a Chinese producer tried to increase the offers between CNY50-100/ton ($7-14/ton), compared to a week earlier as supported by the slight increases in monomer prices. Starting from the week commencing March 9, PET Bottle prices in the local market were on a continuous downward price adjustment following the downtrend of MEG and PTA prices due to the crash in crude oil prices. In March, total reduction made by sellers recorded between CNY100-400/ton ($14-57/ton).
In the export market, an upward price correction only happened in the second week of January. A Chinese PET producer increased the offers by $10/ton as compared to a week earlier. However, the offers were deemed too high and unworkable. For the rest of the month, offers for export PET Bottle were stable to softer. After the long Lunar New Year holiday, in February, export Chinese PET Bottle prices decreased between $30-50/ton as compared to the level before the Lunar New Year holiday. In March, the downtrend in crude oil prices and the Coronavirus outbreak outside China dragged down the offers between $10-40/ton. Despite the downward price correction, SSESSMENTS.COM noted that some producers were willing to provide a room for negotiation up to $10/ton lower than the initial offer.
Overall, demand for PET Bottle resins in the local and export market was generally on a downtrend during Q1 2020. In the local market, sufficient inventory from procurements made in Q4 2019, Lunar New Year Holiday, Coronavirus outbreak, and the plunge in crude oil prices dampened buying appetite. On the back of a lot of uncertainties in the market, buyers preferred to wait on the sidelines. In the export market, SSESSMENTS.COM was told that demand was even slower as compared to the local market. Buyers’ expectation for lower prices and concern over shipment disruption amidst the outbreak had pushed buyers to halt procurement activities.
On the production front, China’s Dragon Special Resin resumed production at its 260,000 tons/year PET plant on January 19. The plant located in Xiamen, Fujian Province, China, was shut for maintenance purposes. As noted by SSESSMENTS.COM, China Zhejiang Wankai’s 1.2 million tons/year PET plant and the other Chinese PET producers reduced the operating rate to 60%-70% due to the slow market amidst the outbreak. Upstream, some PTA producers also slashed the operating rates to 60-70% to prevent the build-up of inventories. Meanwhile, Hengli Petrochemical achieved full operating rates at its fourth PTA unit on the week commencing March 9, following the start-up production on January 8. The PTA unit located in Changxing Island, Dalian City, China, has a capacity of 2.5 million tons/year. At the end of March, China’s Zhejiang Wankai New Materials conducted a trial run at the company’s new PET plant in Chongqing Fuling on March 25. The new plant can produce up to 600,000 tons/year of PET. In total, the producer has a capacity to produce 1.8 million tons/year of PET. The commercial materials from the new plant are expected to enter the market by March 27.
Looking into Q2 2020, Chinese market players stated a bearish outlook for the PET market. PET Bottle price trend is expected to remain in a downtrend taking into account the slow demand stemming from intensified Coronavirus outbreak outside China. Besides, materials from the new PET plant in the country would also put pressure on prices, as stated to SSESSMENTS.COM.
Range of local PET Bottle transactions in January on cash, EXW China basis (CNY term including 13% VAT, all equivalent in USD excluding VAT)
| Origin | Transaction Type | Offers (CNY/ton) | Equivalent in USD/ton |
|---|
| China | Offer Given | 6,550-6,800 | 821-853 |
| China | Sold | 6,750-6,800 | 847-853 |
Range of export PET Bottle transactions in January on LC at sight, FOB China basis
| Origin | Transaction Type | Offers (USD/ton) |
|---|
| China | Offer Given | 840-890 |
| China | Offer Received | 840-870 |
| China | Sell Idea | 845-860 |
| China | Sold | 840-890 |
Range of local PET Bottle transactions in February on cash, EXW China basis (CNY term including 13% VAT, all equivalent in USD excluding VAT)
| Origin | Transaction Type | Offers (CNY/ton) | Equivalent in USD/ton |
|---|
| China | Offer Given | 6,200-6,400 | 778-803 |
| China | Sold | 6,100-6,300 | 765-790 |
Range of export PET Bottle transactions in February on LC at sight
| Origin | Transaction Type | Offers (USD/ton) | Delivery Term | Delivery Location |
|---|
| China | Offer Given | 790-850 | FOB | China |
| China | Offer Received | 790-820 | FOB | China |
| China | Bid Received | 830 | FOB | China |
| China | Sell Idea | 790 | FOB | China |
| China | Sold | 820-830 | FOB | China |
| China | Sold* | 830-840 | FOB | China |
| China | Sold** | 790-800 | FOB | China |
| China | Offer Given | 865 | CIF | India Main Port |
| China | Sold | 865 | CIF | India Main Port |
Description: * Sold to Middle East **Sold to India
Range of local PET Bottle transactions in March on cash, EXW China basis (CNY term including 13% VAT, all equivalent in USD excluding VAT)
| Origin | Transaction Type | Offers (CNY/ton) | Equivalent in USD/ton |
|---|
| China | Offer Given | 5,250-6,300 | 658-790 |
| China | Offer Received | 5,600-5,700 | 702-715 |
| China | Sell Idea | 5,400-5,500 | 677-690 |
| China | Sold | 5,300-6,300 | 665-790 |
Range of export PET Bottle transactions in March on LC at sight, FOB China basis
| Origin | Transaction Type | Offers (USD/ton) |
|---|
| China | Offer Given | 690-820 |
| China | Offer Received | 680-790 |
| China | Bid Received | 735-770 |
| China | Sell Idea | 685-820 |
| China | Sold | 680-790 |
Tags: China,English,NEA,PET,Quarterly
Published on April 10, 2020 5:24 PM (GMT+8)
Last Updated on April 10, 2020 5:24 PM (GMT+8)
