Views: 11 Author: Site Editor Publish Time: 2018-08-02 Origin: Site
PET bottle chip lacked up momentum recently, despite rapidly hiking polyester feedstock. As a result, cash flow squeezed substantially.
In terms of cost side, some PET bottle chip orders may face certain losses. According to CCFGroup statistics, spread between water bottle chip and polyester feedstock cost narrowed to below 1000yuan/mt till last Friday, which means PET resin cash flow has fallen back to 300-400yuan/mt. Some large orders that settled at 8800-8900yuan/mt previously have been near breakeven or even suffered losses. So far, based on Monday polyester feedstock cost level (PTA 6630-6660yuan/mt and MEG 7720-7780yuan/mt), polymer cost was calculated at 8250-8300yuan/mt, theoretical cost of EXW PET resin shall be around 8900-9000yuan/mt. If factoring auxiliary materials like IPA, PET resin price shall reach at least 9000 to stay profitable. This means if polyester feedstock maintains at high level in Aug, PET bottle chip plants that took in Aug orders previously at below 9000yuan/mt will face loss.
In terms of supply and demand, PET bottle chip market has been modestly deestocking in Jul. On one side, summer delivery was massive, on the other, Jul orders were generally sold out. Factory felt scarce stock pressure. So far, factory order intake was not quite optimistic for Aug-Sep delivery. Some plants still haven’t sold out H2 Aug materials. Later on, with overseas units gradually restarting, supply pressure will increase.
In terms of trade sentiment, some dealers that sold short previously was hit hard by the over quick rising polyester feedstock. Short covering demand is emerging, but downstream demand didn't catch up with upstream feedstock rise. In past two days, PTA futures jumped up, boosting PET resin trading sentiment, but deals settled remained at low level. Traders also sold in line with factories.
Overall, PET bottle chip price is forced up by hiking polyester feedstock. Traded price lacks up momentum due to reducing speculative demand, but market is still supported by previous tolerable order intake. In medium-long run, we hold soft views, amid a spate of new capacity on line.