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Asian PET markets hit fresh multi-year lows

  • 18/01/2016 (03:16)
Chinese and Southeast Asian players report fresh multi-year lows in the PET market amidst declining upstream costs as well as thin demand, which keeps diminishing even further in line with the approaching Chinese New Year.

Spot PET production costs shed $60/ton for PX, $20/ton for PTA and $30/ton for MEG over this past week whilst crude oil prices on NYMEX hovered around the $30/bbl threshold. As a result of these spiralling down production costs coupled with persistently weak demand, export PET prices out of China also shed $30-40/ton during last week. Inside China, the panorama was no different with locally held prices losing around CNY200/ton ($30/ton) from a week earlier.

To track weekly developments in China’s PET market, please see China Weekly PET Analysis (For members only)

A Chinese producer commented, “Since crude oil prices have been constantly decreasing, we receive very few inquiries from players. As long as crude goes down, PET prices will follow. Plus, it is the low season and we do not expect any recovery before March.”

A trader operating in Shanghai also said, “We managed to export some PET cargoes to some markets in Southeast Asia and Indian sub-continent but we can’t say that our sales amounts were satisfactory at all. Demand remains very weak and buyers keep purchasing on a hand-to-mouth basis. Overall operating rates in China are around 70% capacity and we do not expect demand to revive before March. If crude oil prices continue to fall, the PET market will not be able to resist.”

In Southeast Asia, according to ChemOrbis SEA PET Price Index, import PET prices recorded additional decreases and hit the lowest levels since the PET index was first launched for the region in January 2013. Import PET prices in Southeast Asia recorded $20-45/ton decreases over this past week on CIF SEA basis while local prices declined in Indonesia and Malaysia.

To track weekly developments in Southeast Asia’s PET market, please see SEA/India Weekly PET Analysis (For members only)

A Malaysian producer noted that the impending holidays keep pressurizing the buying interest and most players prefer to work with low stocks. This producer, given thin demand, cut their export prices by $20/ton on CIF basis and lowered their local prices by MYR50/ton ($11/ton) on FD basis, last week.

An Indonesian converter said, “Our end product demand for bottle caps declined by 30% during the November-December period while we anticipate even further weakening for demand during the rainy season in Indonesia, which will start around mid-April. We find the locally held prices more competitive than the Chinese PET imports and we wait to see further declines on offer levels.”

A Vietnamese converter noted, “Although our end demand is not too bad, we hope that it will improve further once the Chinese New Year holiday is over. For now, we are only meeting our urgent needs as we refrain from building up stocks. We can only consider building stocks if prices show a change on their southward direction.”
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