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Asian PET markets shift direction on weakening cost support

by Thi Huong Nguyen -
  • 07/05/2024 (05:58)
Asian PET bottle markets failed to sustain their short upturn, which kicked off in the first half of April on the back of cost support and improving demand. The upward movement was followed by a two-week stability before prices experienced renewed drops over the week ending on May 3, given the falls in upstream markets and weakened buying power.

China markets dropped fastest, levels under $900 mark reappeared

As for the week ending on May 3, sellers applied downward adjustments of $10-20/ton to export PET bottle prices from China, to be assessed at $890-920/ton on FOB, cash basis. After the recent downturn, levels under the $900 threshold were resurgent after four weeks.

Domestic prices inside the country also declined by CNY50-100/ton ($7-14/ton) to be assessed at CNY7000-7150/ton ($855-874/ton excluding VAT) FD/ex-warehouse, cash including VAT. ChemOrbis data showed that the average of domestic prices in USD terms reached its lowest point since mid-January.

Meanwhile, export prices out of South Korea and import prices in Southeast Asia witnessed smaller weekly decreases of $10/ton, being assessed at $950-970/ton on FOB Busan, cash and $940-1010/ton CIF SEA, cash, respectively. The latter has maintained a premium of $15/ton over the former for the third consecutive week, according to ChemOrbis Price Index.

Domestic prices stabilized in SEA despite weak conditions

Although unsupportive costs and demand weighed on market sentiment, domestic prices kept moving sideways in Southeast Asian countries.

“Despite softer feedstock prices, we opted to roll over our offers to the region. Demand ticked up in early April yet has fallen again as converters are still operating at reduced rates. However, we have decided to monitor market conditions in the near term to ascertain future hikes or discounts since production costs are still high,” said a source from an Indonesian producer.

Upstream values on downswing

The key feedstocks of MEG, PTA, and PX prices in Asia have continued to drop in the second week amid ample supply, combined with the recent slump in crude oil. Therefore, most sellers adjusted their offers downward, citing easing cost support.

A Chinese trader said, “We reduce our offers as feedstock prices have fallen over the past two weeks, weighed down by rising inventories. Demand has waned due to the upcoming May Day holiday, while downstream factories have not operated at full rates.”

Data obtained from ChemOrbis Price Wizard reveals spot PX, PTA, and MEG prices declined by $10/ton over the week ending on May 3, to be reported at $1040/ton, $775/ton, and $510/ton, respectively, all on CFR China basis. Being impacted by geopolitical issues, Brent crude oil futures posted a sharp weekly decrease of more than 7% to settle at the lowest level since February of $82.96/bbl as of May 3.

Lingering subdued demand added to gloomy scenario

An underlying weakness in Asian PET markets continued to call for limited demand. Converters still preferred to buy on a need basis, while buying interest was further reduced amid a holiday lull.

A Jiangyin-based trader reported, “The two-week downswing in feedstock leads to fresh cuts in PET bottle prices. Although buyers made some small-volume replenishments in April to hedge against potential feedstock increases, demand has faltered again given the May Day holiday.”

As a side note, some Korean and Taiwanese producers have maintained their focus on other global regions, which have offered better netbacks. “Regional purchase enthusiasm remains flat when compared to robust demand and prices in the US market. Thus, we keep focusing on sales there,” said a source at a Korean producer.
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