Will Tight Supply Stemming From Shutdown At Several Plants Prop Up China PET Prices?
- Local and export PET Bottle offers moved in tandem
- Sales in local and export market showed polar opposite performance
- Sellers and buyers expect different movement for PET price
Chinese sellers questioned whether tight supply from the shutdown at several plants will prop up PET prices onwards since some buyers still expect lower prices. For the week commencing May 11, SSESSMENTS.COM’s data showed that local and export PET prices were recorded stable to firmer. In the local market, offers for PET Bottle from producers were adjusted up by CNY50/ton ($7/ton) compared to a week earlier. While from the traders’ side, the offers remained stable compared to the same period. Likewise, to the export market, offers for PET Bottle captured stable to $10/ton higher than last week’s level. One of the local producers explained that currently, the price gap between the South China and East China market has disappeared due to Coronavirus pandemic, citing that the consumption from the downstream factories in both markets is shrinking substantially.
Demand-wise, some producers told SSESSMENTS.COM that sales in the local market are still ongoing although some buyers recently changed their purchase pattern; prefer prompt to forward delivery. However, according to traders, some buyers are not keen on buying as they still expect lower prices, while the trader itself is unwilling to adjust down their offers due to supply limitation. In contrast, demand from the export market remains sluggish. Usually, producers’ allocation for export is around 40-50%, but since the pandemic, the allocation is only 20-30%. Speaking of supply, sources with knowledge of the matter informed that China’s Jiangyin Chengold Packaging Materials’ two PET lines with each capacity of 600,000 tons/year remain offline for maintenance. Additionally, China Far Eastern Industries’ 400,000 tons/year PET plant has yet to resume production since the explosion happened on April 17. As such, supply in upstream will be lesser in the near term.
For the outlook, the majority of sellers believe that tight supply would support the prices in the days to come despite it still highly depends on PTA and MEG costs. On the contrary, buyers prefer to wait on the sidelines while insisting on lower prices. At this point, traders opined to SSESSMENTS.COM that buyers will win and PET prices will eventually be corrected down.
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