Firm trend in Asian PET prices changes direction

In line with higher upstream costs, PET prices in Asia have been following a firm trend for a long time. As per Chemorbis, this week the situation has changed due to softening feedstock costs as well as comfortable stock levels with buyers. Spot PX prices lost US$77/ton FOB Korea from last week, while spot PTA and MEG prices lost US$75/ton and US$90/ton, CFR China basis, vs last week. Current spot figures are also lower when compared with early March levels. From early March levels, spot PX prices indicate decreases of US$25/ton, PTA prices represent US$60/ton and MEG prices show US$145/ton decreases. Weaker demand from the polyester sector is also reported to be amongst the reasons for lower PTA and MEG figures. In Asia, export offers out of South Korea indicate US$20/ton decreases at both ends of the offer range on FOB Busan, cash basis with respect to last week. These decreases are contributed to slowing trading activities as buyers preferred to wait in the sidelines given the softer upstream costs. Looking at China’s export market, the overall price range lost US$10/ton at the low end of the range on FOB China, cash basis while the high end remains stable on week over week basis. However, players report that offers standing close to the high end were getting scarcer towards the end of last week. As lower upstream costs caused buyers to refrain from making new purchases, producers had to concede to decreases of US$10-20/ton within the offer range to generate better buying interest. However, even these price cuts failed to revive buying interest in the market. Inside China, domestic producers elected to lower their prices by CNY100/ton (US$15/ton) at both ends of the offer ranges on week over week basis. Lower feedstock costs pushed producers to concede to decreases amid strong resistance growing on the buyers’ side. However, these cuts were not good enough to revitalize the buying interest in the market and therefore, some producers started to mull over lowering operating rates considering their dissatisfying sales performances. Meanwhile, due to lack of confidence regarding the market trend, distributors preferred to stay away from building up stocks. Some bottle makers also complain about their disappointing end product businesses and they do not want to exceed their minimum needs when making fresh purchases despite the approaching high season. Over the short term, the bearish sentiment is expected to prevail in the PET market considering the softer upstream costs. However, with the high season being just around the corner, this downward trend is not anticipated to be a long lasting one.