Will PET bottle chip price stabilize with 3-day transaction volume surpassing 300kt

After experiencing continuous declines, the PET bottle chip market finally saw a welcomed surge in transaction volume in early March. The anticipated intra-week trading volume for the first three days is expected to surpass 300,000 tons, constituting approximately 35-40% of the monthly sales plan. This includes a single-day transaction volume exceeding 150,000 tons on Wednesday, instilling some confidence in the previously fragile market sentiment.

Will the PET bottle chip market stabilize from here? Opinions on the post-holiday market outlook vary. On one hand, PET bottle chip factories are delivering substantial domestic and international orders post the holiday, and their pace of adjusting prices is relatively slow, with a strong inclination to maintain prices firm. On the other hand, some traders, holding significant contract volumes, are proactively promoting sales post the holiday.

Despite attempts by some traders to depress the market through low-price promotions, and in turn to influence factory prices, their bearish determination seems insufficient. Once raw material futures show signs of recovery, low-price short positions quickly converge. Additionally, as market prices decline, downstream manufacturers' year-end procurement intentions are resurfacing, with recent stockpiling primarily for second-quarter 2024.

Following the significant surge in transaction volume over the past two working days, coupled with a slight rebound in polyester raw material futures, PET bottle chip factories are inclined to maintain prices firm in the short term. This may limit the operational space for traders, who are likely to opt for gradual replenishment near the lows to secure previous order profits or take back-to-back orders, reducing the risk of later restocking.

Apart from this, attention should also be given to the restart of bottle chip units and the progress of new capacity launch, which could impact the market situation. However, based on current information, the expected increase in supply in the first half of the year is relatively limited. Some factories have postponed the commissioning of new units. The main increase may come from the restart of previously idled units and O/R elevation for output cut units.

Taking everything into account, with short-term stabilization of raw material costs combined with the positive factor of increased transaction volume, the PET bottle chip market is expected to experience a bottoming-out trend. However, under the continued temptation of downstream large factories purchasing distant-month bulk orders, some bottle chip factories may still consider accepting reduced profits to maintain market share. Simultaneously, it cannot be ruled out that, after restocking at lower levels, market traders may intensify pricing "competition" through the digestion of contract inventories.