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Can recent upturn be sustained in Asian PET bottle markets?

by Thi Huong Nguyen - thihuongnguyen@chemorbis.com
  • 16/04/2024 (10:14)
PET bottle markets snapped a 3-week stability on cost-driven hikes across Asia over the week ending on April 12. Further contributing to sellers’ renewed confidence was a slight pickup in buying interest. However, the sustainability of the latest uptrend has been under doubt as overall demand has remained in the doldrums, defying the peak season.

Sellers targeted margin recovery on firm costs

Most producers took advantage of surging oil prices, issuing renewed increases of up to $40/ton last week. A source at a producer based in China underlined, “Oil prices continue to climb higher, strengthening cost pressure on producers.” Meanwhile, a South Korean producer’s source opined, “Feedstocks have been on the rise, which has eventually enabled producers to increase their PET bottle offers.”

ChemOrbis data shows Brent crude futures has preserved its five-month high, at around the $90/bbl mark, for the last two weeks. Spot PX and PTA prices have recorded total gains of approximately 4-5% over the past month. However, some slight corrections of $5-10/ton were made last week for PX, PTA, and MEG feedstocks, pushing the prices to $1055/ton, $785/ton, and $520/ton, respectively, as of April 9, all on CFR, China basis.

As for the week ending on April 12, export PET bottle prices from China and South Korea were assessed $10/ton higher from the previous week at $900-940/ton and $960-980/ton, respectively, on FOB, cash basis. Notably, import prices in Southeast Asia witnessed larger weekly hikes of $20-40/ton, being assessed at $950-1020/ton on CIF, cash basis.

Asia – PET bottle

China’s domestic market also cautiously firmed up following a two-month hiatus, with PET bottle prices seeing rollovers to modest gains of CNY100/ton ($7/ton) lately. The supply-demand imbalance still dampened the trading atmosphere inside the country, with the local producer’s source adding, “Currently, the market has sufficient supply, whereas the purchasing enthusiasm is insufficient.”

Demand continues to tell another story, despite slight uptick

A marginal demand pick-up indeed aided sellers’ confidence, as a part of buyers engaged in fresh purchases to hedge against potential cost pushes in PET bottle prices, according to market players. “Converters have replenished to avoid further hikes in the upstream chain in the upcoming weeks, albeit in limited volumes. Nonetheless, downstream manufacturing operations have yet to achieve full rates,” said a Chinese trader. The same situation was also reported by a source at an Indonesia-based producer.

However, overall subdued demand put a cap on the applied hikes since many buyers still opted for the sidelines and resisted higher prices, hindering sellers’ hike attempts. Adding to the scenario were major regional holidays in Southeast Asia, with a Thai producer’s source saying, “We try to adjust our quotations upward in line with higher oil prices, but the lengthy Songkran holiday reduces buying activity. We end up with rollovers, as we need to maintain our April sales volume.”

The peak season for PET bottles has been around the corner with the approaching summer, but meaningful improvement in downstream demand has remained out of sight, further pressuring market sentiment. “Demand for our products is subdued. Even though it is the high season, the market stays sluggish. We still prefer to replenish raw materials on a need basis,” a converter noted.

Chinese PET bottles remained competitive

Considering weak market conditions inside China, PET bottles from the country have still been diverted into Southeast Asia at competitive prices, forming the low end of import ranges across regional countries.

In Vietnam, locally-held Chinese-origin cargoes were quoted way lower when compared to local materials, offering more low-priced choices for buyers and posing a threat to domestic sellers’ firm stance. A Vietnamese trader commented, “Local prices have risen by around $20-30/ton, but we maintain offers for our customers, who show no acceptance of any higher prices at this moment. Buyers have many alternative options at lower prices in the markets.”
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