High Cost Low Demand Unable To Chop PET Bottle Chip Value Shortly
Time:2018-10-10

PET bottle chip has been at high pricing but seen sporadic buying since Aug, as PET price was forced up by continuously hiking feedstock while demand slackened gradually. As for rigid demand, substantially retreating PET price in Jul is still casting a shadow over players’ mind against current soaring value. 

A major reason is that most downstream plants are to build stock for Sept and Oct, while end Q3 and early Q4 is annual turnaround season for beverage plants when demand for PET typically declines. So far, beverage operating is slipping but still maintains high. Considering rigid demand, a spate of purchases will show near end Aug and early Sept, hence PET delivery could still sustain for a while. Later beverage O/R decline is inevitable. Comparing with downstream large plants, small-medium blowing plants and PET sheet enterprises are facing more difficult situation. They can use bright chip to replace hiking PET bottle chip to reduce cost previously, but now bright chip price is also soaring. Under expensive cost, O/R of some downstream plants obviously reduces. This is a bear for traders who depend more on small-medium clients. 

PET bottle chip delivery and factory stock is not so bad as market expected, because there is a time gap between price fluctuation and real operation. According to CCFGroup statistics, PET bottle chip factory inventory is merely 7-10 days, some lower within one week. Since PET resin price declined in drastic in Jul, export order increased evidently, hence even by end Jul, PET market continued destocking to some extent. Since PET price traced up hiking feedstock recently, factory order intake was miserable in Aug. Some plants didn't have any decent deals nailed for half month. Trader sector also didn't see much turnover. Near late Aug, PET resin stock level is expected to pile up again. 

So far, according to CCFGroup statistics, 700-800kt capacity was shut down in Aug. Daily output cut is assessed at 5000mt/day if factoring in previous shut units or units that turn to produce other products. But if calculating newly increased supply, real production reduction is estimated at 2000-2500mt/day. This means given more PET bottle chip plants to undergo turnaround in H2 Aug, PET resin stock level will decline further. And more PET materials will flow to traders or end-users. 

Looking at below figure, overseas supply increase mainly focuses on Vietnam and U.S., volume assessed around 2000-2500mt/day, largely in line with China’s effective output contract. 

Figure 1. PET bottle chip plant maintenance and startup plan in and abroad 

Type

Country

Producer

Capacity(kt/year)

Shut

Come up

New

China

Sanfangxiang

500


end Jun

New

Vietnam

Far Eastern

400


End Jul-early Aug

New

Lithuania

Neo

160


end Jun

Restart

China

Chengxing

600

early June

late Jul

Restart

United States (US)

M&G

360

2017

Jul-Aug

Restart

Oman

OCTAL

500

end May

late Jul

Restart

Egypt

EIPET

540


Aug

Restart

United Arab Emirates

JBF

360

2017

uncertain

Shift production

China

Far Eastern

150

early June

uncertain

Cut output

China

Sanfangxiang

600

Jul-Aug

uncertain

Cut output

China

Baosheng

60

Aug

uncertain

Cut output

China

Anyang Chemical

150

Aug

uncertain

Cut output

Spain

Novapet

250

May

Jun



PET bottle chip RMB value still have potential to tick up within short while export price may hold steady, with few brands possibly seeing promotion.