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Recovering downstream activity supports sentiment for PET bottle in China

by Pınar Polat -
  • 26/02/2020 (04:16)
China’s local and export PET bottle markets have been following a largely steady note for the past two weeks as the gradual resumption in downstream activity has offset the impact of mounting inventory.

The news that factory workers in China are gradually getting back to work has supported the sentiment in the PET market to some extent since last week. Prior to this, factories were forced to remain offline for around two weeks after the end of the extended Lunar New Year holiday in an attempt to prevent the spread of COVID-19.

The activity pick-up has eased concerns over supply recently, market players reported. Since the start of the novel outbreak by late December 2019, China’s PET inventories have increased amid sluggish demand and pushed sellers to cut their operating rates or even to shut their plants.

This week, several Chinese producers have rolled over their PET bottle offers to export outlets and to their own markets for early March shipment, citing the slow recovery in buying interest.

A source at one of these companies opined, “Although overall demand remains weak, trading activity has improved since last week with players beginning to return to their desks.

However, downstream players are still holding high inventories. Therefore, PET bottle prices have moved sideways and we expect to see a similar trend over the near term.”

Prices mostly stable at multi-year lows

The weekly average data obtained from ChemOrbis Price Index reveal that PET bottle prices on FOB/ex-warehouse China basis have almost stabilized at their lowest levels since February 2016 and January 2016, respectively.

Export PET bottle offers from China are currently reported at $800-825/ton FOB, cash basis. The range is currently stable to $5/ton lower when compared to last week.

The local PET bottle market has also followed suit, with prices following a stable to CNY50/ton ($7/ton) lower trend on the week to be reported at CNY6150-6300/ton ($876-898/ton without VAT) on an ex-warehouse China, cash including VAT basis.
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