China’s rising PET trend takes a pause, but longer-term outlook remains firm
Local demand still robust, prices likely to be supported through summer
Despite the hiccup in the uptrend of export offers, local PET bottle prices in China have remained unchanged on a weekly basis.
“Our prices to the local market are stable as domestic demand continues to be strong,” noted a source from a producer.
He added, “Producers’ outlook for PET resin demand and pricing remains bullish as both will be supported through summer.”
Summer months stretching from June to August are traditionally the high season for demand as high temperatures drive people to frequently quench with soft drinks usually packaged in PET bottles.
Supply will not be ample as few plants will start up in H2
According to some players in the country, limited supply should also support prices in the longer term.
“In the first half of the year, there are only two new PET plants on stream, namely Chongqi Wankai’s 600,000 tons/year unit and Dalian Yisheng’s 300,000 tons/year unit. For the second half, Hainan Yisheng’s 500,000 tons/year unit is now trying to start up and no other new PET plant is expected to come on stream. So, the low supply issue will remain in the near term.”
Players expect to see a gradual demand recovery in SEA
For Southeast Asia, there has been an uptick in demand as key downstream manufacturers have started to ramp up production, following their emergence from COVID-19 related lockdowns.
PET bottle suppliers in China note that they are expecting to receive an increasing number of orders from their Southeast Asian customers in the near term.
“Demand from the region is still limited for the time being. In Vietnam, buying interest remains weak also due to the rainy season. However, we believe that more regional converters will soon be back to the market in line with the easing of lockdowns,” a seller based in China commented.
Factors casting doubt on firm expectations
Despite most players’ bullish expectations for the upcoming term, there are still some factors casting doubt on further price hikes for PET bottle.
Cost support may not be back soon
According to data from ChemOrbis Price Wizard, spot PTA prices are slightly down by $5/ton from last week at $430/ton CFR China, while spot MEG has posted a cumulative drop of $12/ton in the last two weeks to be standing at $415/ton on similar terms.
According to a few players, spot PTA prices might remain under downward pressure over the near term due to ample supplies inside China amid new capacity additions.
Resurgence of coronavirus in China
Some players believe that the market sentiment may turn cautious once again due to the fresh outbreak of the novel coronavirus in Beijing.
The capital city has raised its COVID-19 emergence response level and reimposed some strict measures immediately after the resurgence of infections.
“The local government’s rapid reaction to the new cluster has implied that there has been a controlled approach against the outbreak. Still, some buyers may resume their wait-and-see approach to monitor if the second wave will impact their end business sector,” opined a trader.
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