- China PET prices were mostly moved following PTA and MEG prices in Q2 of 2020
- Demand for PET in China was robust since the beginning of the quarter until the first half of June
- China Far Eastern Industries shut PET plant since April 17 for one and a half month
SSESSMENTS.COM noted that China PET prices were mostly firm and moved following PTA and MEG prices during Q2 of 2020. In the first half of April, local PET prices in the country were captured on an uptrend. In the first week of the month, Chinese PET producers applied increases between CNY50-500/ton ($7-71/ton) on PET Bottle offers to the domestic market and between $5-40/ton to the export market due to high PTA and MEG cost. A week later, local offers increased further between CNY150-200/ton ($21-28/ton) supported by healthy demand. Some Chinese producers also attempted to adjust up export offers between $5-10/ton in the same week, but received cold responses from buyers. There were no changes applied on local and export PET Bottle offers in the third week of April while in the fourth week, local offers decreased by CNY100/ton ($14/ton). All changes were on a weekly comparison. Throughout May, local PET Bottle offers in China were on an uptrend. At the beginning of the month, local offers ranged between CNY5,300-5,500/ton ($756-784/ton) on cash, EXW China basis and including 13% VAT. By the end of the month, the offers were already between CNY5,600-5,700/ton ($798-813/ton) with the same payment and delivery terms.
As for export, most Chinese PET producers only adjusted up export offers in the first and third week of May, between $5-30/ton. In the second week of May, offers were stable while in the fourth week, offers decreased by $5/ton on a weekly comparison. In June, changes were only captured on local PET Bottle offers in the first half of the month. In the first week of the month, local PET Bottle offers increased between CNY50-100/ton ($7-14/ton) from a week earlier. In the second week, offers from most local PET producers in China were stable on a weekly comparison. Only one producer contacted by SSESSMENTS.COM that applied increases on local offers, between CNY100-150/ton ($14-21ton) compared to the same period. In the second half of the month, local PET Bottle offers in the country were relatively stable week-over-week. As for export, Chinese PET producers maintained offers stable on a weekly comparison during June due to unsupportive demand in the export destination countries. The offers mostly stood at $700/ton on LC at sight, FOB China basis.
Demand for PET in China was robust since the beginning of the quarter until the first half of June. Buyers secured PET resins to prepare for the peak season for bottled beverages sales in summer. Furthermore, considering price increases in May, buyers stocked up in anticipation of a further price increase. Some local producers sold out allocation for June delivery in May. In the first half of June, SSESSMENTS.COM was informed that buyers even placed orders for forward delivery. The situation changed in the third week of June as buyers had secured materials and finished stocking up. PET demand remained weak until the end of the month. On the other hand, demand from the export market was weak during the quarter because export destination countries were still struggling due to COVID-19 pandemic. On the supply side, market players reported that supply for PET Bottle is quite limited during the quarter. On the plant news, a major fire broke out at China Far Eastern Industries on April 17. 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 was shut for one and a half months.
Looking into Q3 of 2020, most market players opined to SSESSMENTS.COM the determiner for local PET price movement in China is PTA and MEG price movements. PET Bottle prices in China will remain relatively stable if changes in PTA and MEG prices are insignificant considering low inventory level on local producers’ end. Some others see a possibility for a downtrend in PET prices since demand for PET Bottle is predicted to weaken further when the peak season for end-products ends in mid-July.
