China's PET market returns on a softer note

China's PET market started the week after the New Year holiday on a softer note, as export prices softened out of the country, as per ChemOrbis. Lower upstream costs and the newly added capacities played a role in this softening whilst sellers were complaining about seeing poor demand from their overseas customers. Export PET prices out of China softened by US$5-10/ton while they were US$10/ton lower out of South Korea. Meanwhile, inside China, PET prices tracked a stable to CNY100/ton (US$16/ton) softer trend on a week over week basis. A source from a Chinese producer noted, “We lowered our prices on the back of the softer upstream costs and poor buying interest.” A distributor commented that they were seeing weak demand from their overseas end customers, who hope to see further decreases in the days ahead. Apart from the poor demand, China continues to add new capacities which caused an increase in the overall supply levels at a time when demand is not so strong. In plant news, Hainan Yisheng started up its second PET line with a capacity of 500,000 tons/year this week. This start up caused the producer’s capacity to rise to 1 mln tpa. In the upstream markets, spot PTA prices lost US$5/ton while spot MEG prices shed US$40/ton and PX prices softened by US$10/ton on a week over week basis. In contract news, a global producer nominated their March MEG contract price at a rollover from their February nomination. Despite the US$20/ton softening on spot MEG prices when compared to the end January levels, the rollover on the contract price was said to reflect the supply-demand situation in Asia. A trader remarked, “Traditionally, prices rise after the Chinese New Year holiday. However, this year prices did not go up. At the moment we are adopting a wait-and-see stance as we are not in rush to replenish our stocks. Plus, most players are yet to return to their desks. In the upstream markets, MEG costs lost significant ground and now we are watching PTA and PX costs closely. We believe that the PET market is likely to follow a stable to softer trend over the near term.” According to ChemOrbis, a distributor said, “Despite the fact that some buyers are purchasing, overall purchasing activities can be deemed as slow as buyers are cautious after the holiday. Many prefer to observe the market in order to be sure of the trend. If PTA and MEG costs continue to lose ground, PET producers may have to issue further reductions on their prices in order to grab better buying interest, at least for over the short term until the season starts.”