Lower feedstock costs pressurise PET prices in Asia

Lower feedstock costs have put pressure on PET prices n Asia, particularly in China, where lower domestic prices have been observed, as per Chemorbis. Retreating crude oil prices have moderated feedstock costs amid sufficient stock levels with traders. Crude oil prices have retreated below US$80 for the first time since the middle of March. In Asia, spot PX prices declined by around US$30/ton this week to US$1035-1040/ton CFR Taiwan/China as spot PTA offers recorded a US$40/ton decrease at US$945-950/ton CFR China in line with weaker market sentiment and sufficient stock levels. MEG markets have lost US$40/ton this month due to high inventory levels and the not so optimistic news regarding the global economy to US $850/ton CFR China. However, despite lower feedstock costs, export PET offers for South Korean origins held steady over the past week at US$1320-1350/ton FOB Busan, cash basis. Most major South Korean producers elected to stand firm on their offer levels, pointing to their lack of sales pressure as well as their expectations of seeing better demand in the upcoming days in line with the improving weather conditions. Inside China, domestic PET offers recorded CNY100/ton (US$14/ton) decreases this week at both ends of the range at CNY10650-11000/ton (US$1334-1377/ton without VAT) on ex-warehouse/FD China, cash including VAT basis. Within the range, most producers tried to sustain their previous week’s prices in the first half of last week, but relented in line with falling oil prices and lower domestic PTA and MEG feedstock costs. Trade remains slow as producers’ decreases failed to generate buying interest since most buyers have sufficient stocks sitting in their warehouses. Many prefer to wait a little longer in the hope of seeing lower offer levels in the days to come. In China’s export market, offers levels were reported at US $1290-1320/ton, FOB China, cash basis, remaining steady when compared with the previous week despite lower feedstock costs. Producers pointed to their lower than normal stock levels for their stable pricing policy although they added that they are willing to offer discounts in return for serious counter bids. Sellers report seeing improving demand in line with the approaching high season. For the short term, PET players anticipate seeing some downward trend in the market considering lower upstream costs. However, the fact that producers do not feel much sales pressure owing to their low stock levels, major decreases are not likely to be seen in the coming week.
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