Epidemic impact on high-grade PET flakes
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Epidemic impact on high-grade PET flakes

Views: 0     Author: Site Editor     Publish Time: 2020-03-31      Origin: Site

In the first half year of 2020, PET flake supply is supposed to be tight, as the consumption of soft drinks and mineral water may remain low due to weakness in various sectors, such as transportation, travelling and catering services. Supply of PET flakes is hard to recover to normal level before June, 2020.

In 2019, recycling volumes of PET flakes in China are assessed at about 3.90 million tons, while in 2020, the volumes are likely to shrink obviously. Take Hubei province as an example. According to CCFGroup, the supply of re-PET in Hubei accounts for about 15-20% of the total, and monthly supply is assessed at nearly 60kt. Under the outbreak of the novel coronavirus, the resumption of cleaning plants takes long time, and the supply that is affected may reach above 300kt. In 2020, the total recycling volumes may reduce by above 1.50 million tons, to be about 2.5 million tons.

Market demand for high-end re-PFY with GRS certification may continue growing in 2020, and its output may rise by above 100% year on year, to be at 0.25 million tons originally. However, affected by the novel coronavirus, some new units may be delayed to start up, so the output is assessed lower to about 0.20 million tons. After the Spring Festival holiday, supply of 3A-grade white flakes has been evidently tight, and prices move up. The mainstream prices have risen to 7,000-7,200yuan/mt, up by 200yuan/mt from the pre-holiday level. But conventional PET flake prices are hard to increase affected by weak re-PSF market squeezed by virgin polyester market, and some plants have lowered the prices. Profits of conventional flakes may shrink, and some plants may turn to produce 3A-grade white flakes. According to the output rate of 3A-grade white flakes from recycling bottle bales, about 30-40%, 3A-grade white flake output may reach 0.75-1 million tons based on above recycling volumes of 2.50 million tons. However, the equipment input costs of white flakes are higher than conventional ones, and production efficiency is lower, so it is not likely to reach 0.75-1 million tons. In additional, market participants have expected that supply of 3A-grade white flakes may be sufficient since the second half year of 2019, so the actual shifted capacity may be limited. Its supply and demand is mostly supposed to be balanced, and prices may be flat overall.

Besides, the influence of novel coronavirus on global economy and oil prices is the prime concern at present. If the coronavirus is out of control in global market, oil prices may decrease continually, then the market demand, no matter what specifications, will be negatively affected.