PET bottle chip leads the fall

Recently, coupled with falling feedstock cost and the gradual release of new capacity, PET bottle chip price continues to decline, which has been ahead of all products in the industrial chain.

According to CCFGroup statistics, compared with early April, water bottle chip price in East China has declined by 9.7%, second only to PX; while other polyester products also declined, but within 3.75-6%. Meanwhile, PET bottle chip processing spread has also rapidly squeezed. It can still be maintained at around 1000yuan/mt at the beginning of April, while end April early May, the processing spread has declined to less than 900yuan/mt. PET bottle chip producers are not only facing downward price but also falling profits.

Of course, as most PET bottle chip plants presold materials, downstream beverage factories also speed up procurement and delivery, so factory spot delivery is still tight recently. Processing spread is steady. Overall profitability is also better than other polyester products. However, amid weak expectations, though many large end-user factories intensively built stock end Apr early May, factory sales expanded in drastic, the processing spread was largely squeezed to below 900yuan/mt, mainly for end Q2-Q3. 

From the perspective of export, PET bottle chip export price rose to intra-year high in April, but trading was limited due to slow response from overseas buyers. Deals done focused on early and end month. Total export order intake was at slightly above 300kt, and monthly average figure was less than 300kt in Mar-Apr, which means that export delivery volume may shrink later on. This can be reflected from the squeezing processing spread at $140/mt, and PET bottle chip producers need more export orders to support their sales. Apart from that, EU has announced to issue anti-dumping investigation over PET bottle chip imported from China, once confirmed, China PET resin exports may reduce further though impact is not that large. 

New capacity, Sichuan Hanjiang 300kt/year PET bottle chip has successfully commenced, and the other 300kt/year line delays. Wankai Chongqing III has been put into production end Apr, and players are awaiting official announcement. Sanfame 750kt/year line is expected to delay further, and market news is also heard that the unit may feed raw materials in May

Despite capacity expansion progress, the expectation of sharp increase on supply side is growing stronger and stronger. PET bottle chip price may face downward pressure within short. Since PET plants could get sufficient orders from large end-user plants, traders' pickup pace may be partly capped in May, and their discounts to factory source may of big chance exist.