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Rising costs push PET bottle markets to around 4-month highs in Asia

by Thi Huong Nguyen -
  • 21/09/2023 (02:30)
Asian PET markets have been on an upward trajectory, albeit at a gradual pace, over the past few months. The ongoing rally in crude futures and the resultant increase in feedstock costs have recently led to larger hikes when compared to the previous weeks. However, the extent of these price increases has still been constrained by a general lack of demand.

In Northeast Asia, export prices from China are currently assessed $20/ton higher from last week at $920-980/ton FOB, while local prices inside the country are also assessed CNY50-100/ton ($7-14/ton) higher on the week. South Korea’s export offers have risen above the $1000/ton mark on FOB, cash basis after seeing weekly increases of $20/ton.

In Southeast Asia, the overall range for PET import prices remains stable at the low end while adding a $10/ton increase at the high end, making the range at $930-1040/ton CIF, cash.

Data from ChemOrbis Price Index reveal that PET bottle prices on CIF SEA and FOB China/South Korea have reached around four-month highs.
PET bottle – China, Korea

Feedstock costs track oil prices higher

Oil prices have surged to their ten-month highs in light of a supply deficit caused by extended production cuts from Saudi Arabia and Russia, as well as signs of an economic rebound in China and the US. This has not only underpinned market sentiment but also boosted upstream feedstock prices for PET.

ChemOrbis Price Wizard reveals that PTA and MEG prices have continued to rise further by $5-10/ton to $825/ton and $500/ton, respectively, while PX prices saw larger gains of $40/ton, at $1160/ton, all on a CFR China basis.

As a result, most regional producers are forced to implement pass-throughs to avoid operating at a loss. A Chinese trader said, “Raw materials climbed higher in tandem with surging oil markets, so this week witnessed increases in both export and local prices.” Suppliers in other regions, such as Korea, Thailand, and Indonesia, have also attributed their hikes to cost pressure.

Weak demand caps hikes, but SEA sees some pickups

However, overall subdued demand keeps the applicable hikes in check. Buyers largely stay on the sidelines, adopting a cautious wait-and-see stance. Some decide to make purchases, but with limited quantities for immediate needs, while trying to negotiate for discounts. A source at a producer reported, "Although there is some demand as buyers are aware of high oil prices, they keep bargaining for lower prices."

In the meantime, Southeast Asian markets have seen a slight uptick in buying enthusiasm. Producers report an uptick in inquiries, whereas some buyers also express their need for replenishment, citing low inventory, solid crude oil, and China’s higher local prices.

A source at a producer in Thailand reported, "Given the rising trend, we observe higher inquiries when compared to the previous weeks." Besides, a converter said, "Given the low level of our inventory, we might need to restock some. Moreover, we believe that prices are unlikely to decrease since crude prices have remained firm, whereas local prices in China have reportedly climbed."

Competitive Chinese materials remain a concern in SEA

The flow of low-priced Chinese PET bottles has been a lingering concern among suppliers operating in Southeast Asia. This week, while prices from other markets post increases, offers from this origin pressure the low end of the region’s overall market range. Re-export shipments of Chinese materials priced at aggressive levels are also said to join the competitive race in the region.

"Chinese materials have still caused concerns as they are priced far lower than other origins, and we have heard that the prices of re-exported Chinese cargo from Vietnam are likewise low. Hence, if buyers continue to be stuck between high PET prices and weak end-user demand, they may shift to these materials," said the Thai producer’s source.
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