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PET bottle chip downstream operation in Q1 2019 polyester / cotton
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PET bottle chip downstream operation in Q1 2019 polyester / cotton

Views:0     Author:Site Editor     Publish Time: 2019-04-29      Origin:Site

PET bottle chip demand totaled 1.28 million tons in Jan-Mar 2019, y-o-y growing 7.6%. Water and beverage packaging remains its major outlet. Edible oil demand for PET shrinks somewhat, while PET sheet and other demand for PET maintains stable growth. Export market performance highlighted in Q1, with y-o-y growth registered nearly 30%. Export share of total demand has risen to 40%, mainly bolstered by low market price in previous stage and obvious cost advantage.



In terms of purchasing cycle, since PET bottle chip price stood at low rates before Spring Festival holiday in Q1, downstream and traders generally considered building stock in advance, hence trading atmosphere was good. After the holiday, as spot delivery demand increased, PET price was hard to decline and easy to rise, downstream rigid demand largely emerged, and mainly focused on end Feb-Mar, particularly in late Mar when invoice issue before the policy of VAT cut helped boost up price further. Yet with PET price increasing, trading sentiment in China flattened in drastic since Apr.



Note: the thickness of the bar represents large downstream plants purchasing density
In term of PET consumption in each region, E. and S. China are still PET’s major consumption areas, mainly because of good consuming base and rapidly rallying temperature. S.W. China’s consumption share over PET is lifting.



Soft drink operating rate: 1. China soft drink O/R maintains a recovering tone in Q1, but performance is flat comparing with a year earlier. Impacted by Spring Festival holiday, soft drink O/R slipped in Jan-Feb. After the holiday, the industry run surged once above 80% as some summer products are making promotion, and O/R of some water producers raised to 90% or even 100%. However, since PET price rose too quickly in late period, and large downstream plants generally have built stock ahead of time, downstream purchases over PET resin slowed early Q2 and soft drink O/R also started to fall. O/R of some beverage enterprises reduced to 60-70%. Overall, soft drink output growth rallied modestly from a year earlier in Q1, and PET rigid demand growth appeared tolerable.

According to CCFGroup statistics, China soft drink consumption on PET bottle chip totaled around 1 million tons in Q1, taking up 78% of overall domestic demand, whose share slipped somewhat comparing with a year earlier. Though PET bottle chip realized destocking end Q1, the stock started to pile again since Q2.



Soft drink operating rate in Q1 of 2018-2019

RegionJan-Mar 2018Jan-Mar 2019Change
Beijing61%69%9%
Tianjin41%27%-14%
Hebei75%80%5%
Shanxi55%50%-5%
Inner Mongolia12%11%-1%
Liaoning39%44%5%
Jilin63%36%-27%
Heilongjiang38%42%4%
Shanghai66%61%-5%
Jiangsu77%35%-42%
Zhejiang64%61%-3%
Anhui74%71%-2%
Fujian66%96%30%
Jiangxi68%75%7%
Shandong50%35%-14%
Henan65%35%-30%
Hubei83%93%10%
Hunan56%57%1%
Guangdong71%74%3%
Guangxi26%15%-11%
Hainan54%54%0%
Chongqing75%65%-10%
Sichuan84%94%10%
Guizhou73%49%-23%
Yunnan82%82%0%
Xizang21%19%-1%
Shaanxi75%79%4%
Gansu32%35%3%
Qinghai25%15%-10%
Ningxia56%42%-15%
Xinjiang62%54%-8%

Q1 overall O/R was decent in traditional consumption areas, like in S. China where temperature rapidly recovered and plants in Guangdong also resumed working early. Some regions in E. China faced heavy rain, hence Q1 O/R was not ideal. In N.E. China, since temperature typically begins to rise after Apr, apart from few beverage plant, local running rate generally held low. Besides, performance in N. and S.W. China has been good in recent years, and output share ramped up somewhat. But restricted by slow demand growth in some regions of N.W. China, O/R also saw marginal decline. 



PET bottle chip demand fared tolerable in Q1 2019, coupled with fast growing export order and steadily increasing domestic sales. Market also destocked end Q1. Current good operating condition may push new capacity to launch, while export sales slackened recently, PET bottle chip supply may face pressure in the second half of 2019.


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