PET bottle chip market may correct down late Sep-Oct

Feedstock experienced the excitement of riding roller coaster in the past week, mainly due to volatile crude oil. So far, bearish sentiment prevails in the market, PET bottle chip offer largely moves downward. However, sales ratio is constantly low, affected by slack beverage demand. PET bottle chip price is expected to return to previous low, but downward space is limited.

MEG still enjoys support from tight supply while PTA and PX may weaken under capacity expansion expectation.

PX market is of big chance to return to the stalemate pre-hike as profit was dull, supply is to increase while demand to weaken. For PTA, current O/R keeps high, and turnaround plants seemed have delayed schedule, hence stock is poised to pile up. Later on, PTA price may also fluctuate to pre-volatile level. MEG fundamental is supportive, though may correct down due to weaker crude oil and petrochemical products, its performance in Sep-Oct won’t be too bad.

PET bottle chip plants cut back output or lowered O/R timely previously, supported by intensive delivery of summer orders in the meantime, factory stock level was within control, despite domestic slack order intake. Till end Sep, PET bottle chip stock level may be slightly higher than 500kt, which is within reasonable range.

Export delivery in Aug is tolerable, volume may surpass 200kt if including part of the low viscosity PET resin under the other HS code. In Sep, PET bottle chip delivery volume may lower due to poor order intake in Jul-Aug, but supply also squeezed compared with previous stage, slightly above 190kt order intake in Aug could guarantee smooth export delivery in Sep.

Downstream sector, demand from beverage plants has been slipping, as their procurement have largely finished in 2019. Edible oil demand is in small peak, but scale is generally fixed, hence impact over market trend is limited. PET sheet plants mainly purchased spot PET on need. Though sheet plant O/R regionally moved higher, they have scarce intention to build stock. So far, a small round of restocking will come pre-National Day holiday.

Overall, PET bottle chip market may correct down in late Sep-Oct.