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Asia PET markets increase marginally on cost support, healthy Chinese demand

by Pınar Polat - ppolat@chemorbis.com
  • 03/06/2020 (03:47)
PET bottle prices across China and Southeast Asia rebounded from their record-low levels around mid-May and closed the month on a steady note afterwards. During the initial days of June, however; prices have moved back up slightly on the back of strong energy and upstream values coupled with healthy demand from China.

According to ChemOrbis Price Index, the weekly averages of PET bottle prices on FOB/ex-warehouse China basis are currently standing $695/ton and $800/ton, respectively. As for Southeast Asia, PET bottle prices on CIF basis are currently standing at $727/ton. Prices have gained around $5/ton so far on the week.




Cost side lends support to prices

Several Chinese, Taiwanese and South Korean producers have lifted their export PET bottle prices by around $5-20/ton this week, citing their need to reflect higher costs on their offers.

According to ChemOrbis data, WTI and Brent crude oil futures have reached their highest levels in the past three months. This has eventually found a reflection on upstream markets of PET, sending spot PTA, MEG and paraxylene (PX) prices higher.

What supports the China market?

Demand to strengthen during summer

Summer months stretching from June to August indicate the high season for PET bottle applications. Having already boosted the sentiment, PET demand is expected to support prices throughout this period.

Plus, a trader underlined that although producers are running their plants at full rates, their inventory levels are low. “There have not been many new PET capacities to come on stream so far this year,” he added.

PTA futures reinforce firm sentiment

Apart from the firming in spot PTA prices, traders also noted that PTA futures on the Zhengzhou Commodity Exchange have been slightly higher this week. This has also helped sentiment in China’s PET bottle market.

SEA market mirrors China

Firm sentiment in the neighboring China market has lent some support to Southeast Asia and PET bottle prices across the region opened June with small gains.

In Vietnam, where coronavirus-related lockdown was eased in late April, ahead of other countries across Southeast Asia, a trader reported offering PET bottle for China and ASEAN origins with weekly gains of $5/ton.

Apart from the cost side, expectations of a demand recovery following the emergence of more countries from their COVID-19 related lockdowns also give Southeast Asian PET market hope.

In Indonesia, where the partial lockdown is scheduled to end on June 4, a local producer also lifted its PET bottle offers to its local market by IDR100,000-200,000/ton ($7-14/ton) when compared to last week.

“We have increased our PET bottle offers slightly this week in line with several Asian producers’ firmer pricing amid rising costs. We are now getting ready to monitor the state of post-lockdown consumption in Indonesian provinces,” a company source opined.
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