PBT market to keep buoyant around LNY bolstered by cost

Prices of PBT industrial chain greatly climbed up ahead of Spring Festival holiday. Price of PBT chip, POY50D and DTY50D has rose by 3,350yuan/mt, 4,000yuan/mt and 4,200yuan/mt to 13,000yuan/mt, 15,000yuan/mt and 18,000yuan/mt respectively since Jan, with increment at 34.7%, 36.4% and 30.4% respectively.

Hiking PBT price was mainly attributed to the following major 2 reasons:
The route was soaring BDO price amid short supply. Price of BDO increased by 3,200yuan/mt or 25% to 15,950yuan/mt since Jan. As a result, polymer feeding cost ascended by 1,779yuan/mt or 20% to 10,478yuan/mt. Increment of another feedstock, PTA, was relatively smaller, up by 365yuan/mt or 10% to 3,960yuan/mt.

Supply of BDO was short in Jan-Feb. Spandex market ran at around 95% of capacity. As a result, demand for BDO was strong from PTMEG market. Operating rate of PTMEG plants was above 96%. PBAT, which is a downstream product of BDO, ran at high capacity amid tight supply benefited by policy. Overall demand for BDO was sound in Jan-Feb, while supply of BDO reduced as some units such as Blue Ridge Tunhe and Xinjiang Xinye had turnaround. Some suppliers hoarded up stocks and were reluctant to sell, intensifying supply tightness, amid sound supply and demand pattern. In addition, delivery took a longer time constrained by logistic issue in North China, resulting into fiercer supply/demand contradiction.

The second reason was: PBT polymer plants ran at low capacity. Chip-spun plants restocked for the production after holiday amid increasing price.
Feedstock price surged, while seasonal demand was dull during the Spring Festival holiday; BDO plants reduced supply of contract goods. Profit of BDO was higher than that of PBT. Thus, some PBT plants scaled down production. Comprehensive run rate of PBT market was around 60-70% in Jan. With rising price, downstream chip-spun plants restocked PBT for the production after holiday. As a result, price of PBT chip climbed up amid better supply/demand pattern.

Cash flow of PBT chip and PBT fiber was moderate now due to increasing price, especially chips.

Cash flow of PBT chip has hit the highest since 2019, close to that in 2018 when demand for fibers were hot while supply of fibers was tight. Cash flow of PBT fibers improved obviously on the month but was still lower than the same period of last year.

As for market outlook, supply and demand contradiction on BDO market maintains and price of BDO may hit new high as sellers are reluctant to sell. Price of PBT is expected to be in line with cost in short run.