PET bottle chip export analysis in Jan-Aug 2023

China PET chip export volume totals 3.44 million tons in Jan-Aug 2023, including 506kt for HS code 39076910, y-o-y down 7.7%, and 2.934 million tons for HS code 39076110, y-o-y falling 1.1%. If combine two HS code, PET bottle chip export volume totals 3.15 million tons in Jan-Aug, largely flat from last year.

Note: figures in the chart only calculates HS code 39076110

The monthly average export order intake from January to August this year was around 330-340kt, basically flat compared to the same period last year. If we add some previous contracts, the monthly average shipments can reach around 380-390kt. Considering that the monthly average order intake from June to August were around 360,000 tons, we estimate that the average shipments in September and October could reach 350,000 tons or more.

In terms of export destination, Russia has been one of the most important destinations for Chinese PET bottle chip manufacturers for many years. Particularly after Russia was removed from the SWIFT payment system and faced sanctions from Europe and America, they can basically only purchase PET from China to meet their domestic demand gap. From 2020 to 2022, import volume of PET bottle chip from China to Russia quickly doubled from 133,000 tons to 274,000 tons in a span of two to three years. However, in 2023, due to intensified domestic inflationary pressure, the actual purchasing power declined. From January to August 2023, Russia continued to be the number one destination for Chinese PET bottle chip exports, but the total volume decreased slightly to 167,000 tons, a year-on-year decrease of 7.2%. If this trend continues, the eventual export volume of PET bottle chip from China to Russia in 2023 may be around 250,000 tons.

Figure 1.  Comparison of the top 20 destinations for China's PET bottle chip exports from January to August 2022-2023.

Among the top 20 export destinations, apart from the traditional markets that have continued to achieve year-on-year growth, India's import volume from China has been particularly remarkable.

For India, after the EU imposed a 6.5% general import tariff on it starting from January 1, 2023, theoretically Indian suppliers will have more supplies of PET bottle chip for the domestic market. However, due to the rise in energy and raw material costs, as well as factors such as drought, domestic PET bottle chip factories in India have not been operating at full capacity and cannot meet the increasing demand for PET, resulting in the need to import a portion of the demand, and Mainland China is a good choice, especially because there is still a tariff gap. In addition, after India implemented BIS for China this year, PTA supply has been insufficient, and they had to purchase at high prices from overseas, resulting in a disadvantageous domestic product price. However, there have been rumors recently that Indian domestic factories are considering applying higher anti-dumping duties on PET bottle chip from China, but this is not officially confirmed yet.

South Korea imported nearly 100,000 tons of PET bottle chip from China from January to August, a year-on-year increase of 26%. It has become one of the main export markets for Chinese PET bottle chip. However, with the increase in export volume, local PET bottle chip factories in South Korea have also begun to consider applying for anti-dumping investigations, but there is no official news yet. Although Mexico's import volume from China increased by nearly 30% from January to August, it announced in mid-August that it will impose a 25% import tariff on overseas PET bottle chip , which will further restrict China's PET bottle chip exports to Mexico.

Eastern Europe and the EU countries still experienced partial growth in the import volume of PET bottle chip from China. Since last year, energy and raw material costs in the EU region have been high, and the operating rates of PET bottle chip factories have been insufficient, with some plants declaring force majeure and the supply being unstable, resulting in high prices. They still need to import a portion of PET from overseas. Although there were rumors at the beginning of this year that the EU would initiate an anti-dumping investigation against China, many PET contracts were negotiated last year, so a small number of EU countries still experienced an increase in imports from China this year, such as Germany.

In addition, the growing demand in Central Asian countries in recent years has triggered domestic companies to compete for market share through the establishment of offices, overseas warehouses, and trading companies. From January to August 2023, imports from Uzbekistan increased by 9%, imports from Kazakhstan increased by 24%, imports from Kyrgyzstan increased by 220.6%, and imports from Tajikistan increased by 54.4%.

On the other hand, the import volume of PET bottle chip from China by Turkey in the Middle East region has significantly decreased, with a year-on-year decrease of 85.6% from January to August 2023. The main reason is that after launch of new capacity in the past two years, the domestic demand in Turkey has been basically met.

In terms of export origins, Jiangsu Province is still the largest production and export base of PET bottle chip in China, accounting for 39% of the total export volume from January to August, an increase of 29% compared to the same period last year. The rest are Zhejiang Province, Hainan Province, Guangdong Province, Liaoning Province, Shanghai, and Shandong Province, accounting for 17.6%, 13.4%, 11.3%, 5.2%, 5.2%, and 3.8% respectively. Shandong Province is mainly due to export customs declarations from trading companies, as there are no local PET bottle chip factories. However, the quantity in Shandong Province decreased compared to the same period last year. Sichuan mainly exports to Central Asian countries, and due to the small base, the year-on-year growth rate is relatively significant.

Figure 2. Comparison of the major exporting provinces of PET bottle chip in China from January to August 2022-2023.

In summary, opportunities and challenges coexist for Chinese PET bottle chip export market. On the one hand, there are signs that some consumer markets have set up trade barriers, which may have a certain inhibitory effect on the export growth in the future. On the other hand, the fast-growing demand in many emerging markets can fill the market share that Chinese exporters may lose. According to the latest sales condition, the export delivery volume of PET bottle chip by factories may improve in the later stages of the fourth quarter. However, it is expected that the export volume for the entire year may remain stable or slightly increase compared to last year, and the possibility of achieving significant growth as in previous years is relatively low.