Views:1 Author:Site Editor Publish Time: 2019-02-22 Origin:Site
PET bottle chip market started downtrend post-holiday since polyester feedstock continuously retreated. Despite the weak price, PET cash flow enhanced markedly. Meanwhile, downstream large volume restocking activity also emerged, how will PET resin market develop in the future?
Firstly, polyester feedstock plunged recently, particularly MEG whose lower end price has declined below 4900yuan/mt. However, polyester products orders that factories took in pre-holiday haven’t been fully delivered, hence price fall didn’t follow upstream pace. PET bottle chip declined even slower as factory order intake far outpaced production capacity, which brought it massive cash flow.
Secondly, demand from beverage plants is mediocre post-holiday. But large beverage producers generally have begun to negotiate Q2 orders. Edible oil and PET sheet industries are in slack season and producers mainly procure PET resin on need. PET sheet factories have just resumed working, coupled with not much order and low O/R. Meanwhile, PET resin stock in PET sheet plants is near half-one month, hence their refilling intention appears flat under soft polyester feedstock.
Impact from PET sheet and blowing plants on traders is relatively large. Since current price spread between trader and factory source is not large, traders are more of selling goods at discounts. Since traders’ low-priced stock is digesting, and factories’ orders taken at low-pricing is sufficient, PET bottle chip offer downward cut may still be slower than feedstock.
Export order intake in Nov-Jan totaled 1.1 million tons, y-o-y expanding 150%, which has rendered strong support on PET price in Q1. So far, PET bottle chip export volume that to be delivered is estimated to exceed 800kt.
In medium run, as soft drink producers are to pave way for sales and promotion, typically, O/R of bottled water enterprises is expected to recover to 80-90% late Mar and early Apr when PET resin peak season arrives too. Currently, large PET bottle chip enterprises have almost sold out Feb-Mar orders, and some even started to negotiate May-Jun orders. Export discussion centers on Q2 delivery. Regardless of the ample cash flow, trading price of PET resin may unlikely to get much discounts.
Looking at the supply and demand alone, after this round of narrow fluctuation, PET bottle chip price has a big chance to rally before Tomb Sweeping Day holiday. Upward room depends on whether polyester feedstock will suspend downside and soft drink O/R lifting condition. Risks worth attention is that after mid-Mar, launch of refinery may bring overhead resistance on.