PET bottle chip May exports creates historical high, YOY growing 50% plus

According to the Customs, China PET chip export volume totals 523kt in May 2022, y-o-y growing 46%, including 65kt for HS code 39076910, y-o-y up 10%, and 458kt for HS code 39076110, y-o-y rising 53.4%. In Jan-May, PET chip exports amounted to 2.08 million tons, rising 36.6% on annual basis, including 330kt for HS code 39076910, y-o-y up 14%, and 1.754 million tons for HS code 39076110, y-o-y rising 41.5%. Combine two HS codes, and estimated from factory delivery volume, PET bottle chip export volume was around 1.9 million tons in the first 5 months of 2022, growing 39% from a year earlier, while up 24.5% compared with 2019 level.

Note: combine HS code 39076110 and 39076910

The historical high exports in May was mainly contributed by two factors: 1. Logistics lockdown in Mar-Apr has caused congestion in port, and many delivery was delayed. Apr delivery volume was expected at more than 400kt, while customs data showed merely slightly above 300kt. Therefore, it is reasonable to expect that delivery of this part of volume gap will be delayed to May-June. 2. In January to May, the export order intake of domestic PET bottle chip factories showed a substantial growth compared with the same period last year, with an average monthly volume of around 360kt. So in theory, once the shipping volume in a certain month is less than this average, there is a good chance that this part of the shipment will be made up in the next one to two months.

In May 2022, according to CCFGroup statistics, factory export order intake reaches around 280000 tons, an increase of 37.3% over the same period last year. The export delivery speed of PET bottle chip factory gradually accelerated. The inventory of some large factories declined quickly, and the situation of spot supply tightness may continue for a certain period of time.

From the perspective of the market situation in the past 3 epidemic years, players need to combine the delivery situation in recent 2-3 months. Export data for a single month cannot fully reflect the sales situation of that month. Both order intake and shipping volume increased a lot in May compared with the same period last year, but the actual order intake dropped by 17.8% month-on-month, mainly due to sharp fluctuations in the RMB exchange rate. At the same time, the delay in shipping also affected part of the demand.

However, we should note that since the monthly average export sales from March to May is around 330000 tons, and the actual shipment volume announced by the Customs in April-May has not reached this figure, therefore it is estimated that the shipment volume in June may still be around 350000 tons. This also means that exports may reach about 2.25 million tons in the first half of 2022, while the total output is estimated to be around 5.57 million tons, thus the proportion of exports in total output is expected to maintain or slightly exceed 40%, still forming a strong support for domestic sales.

Overall, PET bottle chip total inventory is expected to fall to around 800000 tons by the end of June, down nearly 400000 tons from the end of last year. But this needs to get rid of exports, domestic contracts sales and large end user manufacturers’ orders that purchased in advance, then the volume left for small and medium-sized customers and traders is not too much. At present, as of last Friday, unissued factory inventory is less than 300000 tons, that is to say, in theory, factories’ daily distribution volume to small and medium-sized customers is basically around 10,000 tons. So far, some domestic ports’ loading and unloading charges are still high, and because drivers are worried that there will be no return (due to epidemic), the cost of picking up goods from warehouses outside the factory may also increase in the future. Bottle chip factories, in the case of tight supply, may choose to sacrifice the interests of some customers who do not pick up goods efficiently. From June to July, market participants shall pay more attention to the situation that shipments are more than new orders.