Uptrend In Crude Oil Prices Unable To Revive Sentiment In Vietnam PET Market
- Local offers hovers near record lows
- Most downstream factories keep operating rates at lower capacity
- Production rate at downstream factories between 60-80%
SSESSMENTS.COM’s pricing data showed that the uptrend in crude oil prices is unable to revive sentiment in Vietnam PET market. The global economic shock of the Coronavirus pandemic has driven most local prices down within the past few weeks, and market players indicated that prices have started to bottom out. In the domestic market, local PET Bottle offers are mostly hovering near record lows of VND18,000,000/ton-level. A local producer maintained a stable offer level from a week earlier, ranging between VND18,700,000-18,800,000/ton ($796-801/ton). This week, local producers managed to secure the deal at the initial offer level as most are unwilling to entertain requests for discounts. In contrast, another producer revised down their offers between VND200,000-300,000/ton ($8.5-13/ton) from last week to match competitive offers from local producers. Some buyers received offers from the same origin via a trader at VND19,000,00/ton ($809/ton), or between VND300,000-500,000/ton ($13-21/ton) lower than the offer level available two weeks ago. All offers are on cash, FD Ho Chi Minh basis and including 10% VAT. From the import market, most import offers are still hovering close to $700/ton-level, ranging between $690-750/ton on LC at sight, CIF Vietnam Main Port basis. As compared to last week’s level, a Taiwanese producer applied a price increase of $50/ton on PET Bottle grades to the Vietnam market. Meanwhile, a Vietnamese PET distributor rolled over offers for Indonesian and Thailand origin cargoes, while deciding to adjust downward their offers for Chinese origin cargoes by $5/ton from last week’s level.
Currently, Vietnamese officials are taking tentative steps to chalk out an economic revival strategy after the peak of the coronavirus pandemic passes. Three months after Vietnam detected its first case of coronavirus, the country has put the coronavirus pandemic under control with below 300 confirmed cases and no virus-related deaths. The government has also started allowing businesses in low-risk areas to resume operations from late April under strict physical distancing protocols. Despite the rebound in crude oil prices and the gradual lifting of the lockdown, the PET market has not shown any sign of recovery as most buyers remain concerned about the negative outlook for economic growth and slow demand for finished products. Amid weak end-users demand for finished products, most downstream factories are running at a reduced capacity of between 60-80% from the normal output. On plant news, Vietnam’s Paihong Co., Ltd is still not operating at full production rate, instead the producer kept at 60%. Market sources said the producer is yet to grasp market share as the company is a newcomer. In addition, the parent company has minimal experience in producing PET bottle resins, therefore, stability in production is expected to take time. At the moment, no significant supply issues have been reported to SSESSMENTS.COM.
As oil prices have continued to rally, sources in Vietnam voiced out that the possibility of PET prices to increase remain high but at a reasonable level since recovery in domestic demand has yet to take place.
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