Views:2 Author:Site Editor Publish Time: 2018-11-23 Origin:Site
Polyester feedstock price sharply rebounded last weekend as crude oil rallied and bullish news on MEG futures was released. PET bottle chip price also bottomed out as a result. Will the market begin to rally?
Firstly upstream, PX industry of China is running at 68-69%, while of Asia is operation at 79.3%. Comparing with PTA O/R of 70% last weekend, PX supply is a bit more than required. Hence, chance for PX to go up is not large. Unexpected elements in crude oil and macro economy side is not concerned. PTA sector, China plants have begun to cut back production, but actual impact depends on implementing strength. PX price was barely suppressed formerly when PTA plants announced to slash output, which is worth thinking. MEG sector, boosted up by futures to launch news, MEG price may likely to move stable-to-strong within short. But supply increase didn't find any outlet, hence upward pressure remains later on.
Therefore, impact from feedstock side is relatively limited. It’s more of attitude transform from over pessimistic to prudent purchasing.
Secondly intermediate sectors, Q4 demand growth slowdown is almost clinched. Polyester sales ratio is continuously flat, and stock level is piling. Hence, market focus is generally on stock build by end year. According to CCFGroup statistics, daily sales ratio needs at least to be above 120% if polyester plants wish to destock before Lunar New Year holiday, which is difficult to achieve so far speaking.
But for PET bottle chip plants, stock level averages around 15-20 days. This level doesn't count high as PET bottle chip export share is large and delivery usually lags behind. So far, some large downstream plants have begun to negotiate H1 2019 contract, and later delivery is to some extent secured.
Newly online capacity may bring some sales pressure later on, and whether export could sustain its momentum is still unknown. From this perspective, PET bottle chip plants require more orders to sustain high O/R.
Q4 is still favorable to China PET export, as a spate of overseas PET units delay restart in Oct-Nov, including Indorama Rotterdam, Indorama Thailand, Lotte Korea, Novapet Spain and NEO Lithuania, a total of 1.11 million tons. E.U. market will face supply shortage.
Overall, polyester industry chain supply and market sentiment enhanced somewhat shortly, as more PTA plants are cutting down production and MEG futures is to launch. In medium-long run, downside is destined. For PET bottle chip plants, price competition is not a long-term solution, rather how to grasp opportunities to lay out the market is, such as overseas cooperation and acquisition.