Views:1 Author:Site Editor Publish Time: 2019-03-11 Origin:Site
PET bottle chip spot value hiked 200-300yuan/mt compared with last Friday, on the back of rising feedstock. But strong feedstock is not the only booster. Major driver is continuous refilling activity by downstream and traders. Take downstream restocking as an example, trading volume by large downstream players has exceeded 100kt from last weekend to this Wednesday. Spot stock in some PET plants declines to half month or even below, and some factories begin to sell May or even Aug goods.
Downstream O/R generally lifts as peak season arrives. In beverage section, running rate of most bottled water plants raises to 90% or slightly above, hence consumption for PET resin is expanding. PET producer also quickens their delivery speed. Regarding PET sheet, O/R of PET sheet plants that make outside package in E. China is generally around 80-100%, while some factories have taken 45 days order. PET sheet plants that produce cap for milk tea etc. is around 80%. Edible oil plants are mainly operating at 90-100%.
Above only describes domestic sales condition. If factoring in export, PET bottle chip stock level shall be negative in Q1 theoretically speaking. At least, most producers have not much pressure in Mar-Apr. Hence, PET bottle chip cash flow could stabilize at above 400yuan/mt, which is quite decent in recent years.
Later on, demand side will render certain support to PET price. End Q1 to Q2, O/R of most bottled water plants will lift to above 90%, juice and carbonated beverage plant O/R may ramp up to 70-80%. This is coincided with traditional promotion period of beverage enterprises (typically Q1 promote juice and carbonated beverage, Apr-May promote bottled water, afterward, the distribution will shift from agents to end-users, such as supermarket and retail shop). This way, rigid demand for PET bottle chip by beverage plants is sustainable, and the stock pile post-holiday is also fading.
Since export order is placed in advance, PET bottle chip producers will put more time and energy on delivery arrangement. Spot stock may not likely to be left much. More pressure will be transferred to traders or downstream intermediate sectors. For traders, part of small-medium downstream plants have built stock ahead of time when PET price was low, hence they won't have much refilling intention if PET price is too expensive. Others are more of wait and see, whether they will restock intensively due to PET price hike is still worth watching. One thing positive is that support from rigid demand is dependable looking at current O/R recovery. Risk lies with whether widening spread between PET bottle chip and bright chip due to successively rising PET resin price will weigh down bottle chip demand.