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Buying resistance, ample supply keep Asian PET bottle under pressure

by Shibu Itty Kuttickal - sikuttickal@chemorbis.com
  • 20/05/2021 (10:10)
Asian PET bottle markets have remained under pressure from a combination of plentiful supplies and buying resistance amid rising COVID-19 cases. Buyers have laid low over the past week, keeping a wary eye on new outbreaks of the pandemic, especially in Southeast Asian countries.

Feedstock PTA and MEG prices have mostly been range-bound over the week and have not provided any cost support to PET, meanwhile.

The story is the same in both the Northeast and Southeast Asian markets: Buyers are still asking for lower prices as they see weak demand in end-user markets, while availability stays a non-issue amid the upcoming new capacities.

Prices are down 10% since the peak in Feb

According to data from ChemOrbis Price Index, the weekly averages of PET bottle prices on FOB China/CIF SEA basis have witnessed a cumulative drop of 10% since they hit almost two-year highs in the first half of February.

PET Bottle Prices - FOB China - CIF SEA

Demand in SE Asia hit by COVID-19 resurgence

Southeast Asian demand has stayed weak due to the resurgence of COVID-19 across different regional countries, while India’s raging pandemic crisis continues. Indonesia, Malaysia, and Thailand have all been reporting new COVID-19 spikes and have announced extensive lockdown measures.

A Malaysian converter was looking to buy while he quoted an import price of $960/ton CIF Malaysia. In comparison, import PET bottle offers were assessed at $1040-1090/ton CIF Southeast Asia, cash basis for the week ended 12 May.

“Demand remains weak as the whole of Malaysia has been locked down. So we are not seeing a lot of orders coming in. We’re just waiting and watching, and will buy only if required,” the converter said.

A source at an Indonesian producer agreed the pandemic is a problem that’s refusing to go. “We’re not able to offer at higher prices as domestic demand is weak and buyers are countering with much lower bids. PTA and MEG prices have offered no cost support. Meanwhile, Indonesia has again imposed lockdowns over several major cities due to spikes in COVID-19 infections,” he said.

Chinese sellers cut offers on reduced export demand

A Chinese producer reduced its PET resin offers, with a producer source pointing to stiff buying resistance because of “less-than-expected demand from downstream markets”. He said domestic markets in China have also weakened further this week, while Southeast Asian demand stayed weak amid the COVID-19 spikes and new lockdown regimes.

A Chinese trader dropped his latest offers, citing weakness in raw material price. “Despite a strong crude oil market, spot PTA and MEG prices have been mostly stable. Plus, PET supply is ample across Asia. We remain slightly bearish,” he said.

PET bottle prices on FOB China basis currently stand at $935-980/ton, down $30-45/ton from last week.

Meanwhile, a source at a South Korean producer also cited COVID-19 as “dragging down the sentiment and demand recovery”. The producer this week offered exports at prices that were stable to $10/ton lower than the previous week. “We reduced or rolled over PET resin offers as crude prices have corrected, pressuring PTA and MEG. Apart from Southeast Asia and India, we find Japan also going through a COVID-19 resurgence. Demand has been hit,” he said.

Export PET bottle prices from South Korea are $10-20/ton lower from last week to be currently quoted at $1030-1050/ton FOB Busan, cash.
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