Firming falters in China’s PET market on lower crude, pre-holiday lull
Lower crude weighs on upstream markets
Early last week, global oil futures spiked in response to the US-Iran conflict. However, the rally proved short-lived as concerns over possible supply disruptions from the Middle East eased off soon after the incidents.
This downturn also found a reflection on upstream costs, resulting in weekly downward corrections of up to $30/ton for spot PTA and PX (paraxylene) prices as of January 14. On a side note, spot MEG prices remained mostly unresponsive to crude oil price swings and found support from low supply.
Meanwhile, Brent and NYMEX crude oil futures snapped five-day losing streak on Tuesday as US and Chinese officials are set to sign Phase 1 US-China trade deal on January 15.
Chinese sellers mostly roll over or cut PET bottle offers
Several Chinese suppliers have approached export outlets with stable PET bottle offers this week or applied slight drops of $10/ton.
A similar scenario was in place for the local PET market, with producers cutting their offers by CNY50-100/ton ($7-14/ton) from last week.
A source from a Chinese producer opined, “We have slightly lowered our export and local PET bottle offers this week as steady declines in crude oil futures weighed on upstream costs. The demand side is also unresponsive considering that players have already started to leave their desks for the Chinese New Year holiday.”
Demand under pressure from winter season, holiday lull
Demand for PET applications in China has been weak given the low season. The buying sentiment is now expected to slow further down particularly from next week onwards as the holiday mood has already started to be felt on the market.
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