Local PET markets remain soft in China, SE Asia

Local PET prices continued to draw a soft outlook in markets such as China and Southeast Asia over this week, as per the pricing service of ChemOrbis. Players blamed unsupportive demand and slightly lower feedstock costs on the week in tandem with the volatile energy complex as the main reasons behind the weak scene. In contrast to softer prices from most sellers, a few producers aim to recover their poor margins via firmer pricing intentions, players report, but buyers believe that prices will not be able to firm up in the near term. In China, a PET producer reduced their local prices by CNY100-200/ton (US$16-32/ton) this week. “Our sales are performing normally with no major improvement. We cut our operating rates to 50% instead of lowering our PET prices. We are not confident about the rest of August considering slack demand,” a source from the producer commented. A second producer defined the general trend as mostly stable whereas local done deals were reported CNY200-300/ton (US$32-48/ton) below last week. “Players are sidelined to monitor market developments. Despite the recent ease, PTA costs remained at high levels while especially local production rates are still at 50-60% for the feedstock,” a producer source highlighted. A third producer offered at their lower end price given limited deals despite maintenance at one of their lines. “We are not very optimistic about the near-term market outlook,” said a producer source. A bottle manufacturer reported, “Sellers are ready to give discounts whereas we are covered until September. Our sales dropped by 20% recently and we may face further contraction in September-October,” he noted. He hopes to see further price relief for PET in the days to come. “Local PET deals are concluded lower as upstream costs are currently weak. Although local PTA prices are still firm, PET prices may not recover in the near term due to slow demand,” a Shanghai based trader commented. Although peak season for beverages waned, demand for film and packaging applications should increase, he added. In Thailand, a producer kept their prices steady while they were not able to conclude many deals. “The softening trend in China affects the Southeast Asian market in addition to the tough economic and political environment. Nevertheless, we hope activity will revive a bit next month as converters may be running out of material,” a source at the producer said. In Vietnam, a trader reported that his supplier tried to increase their price by US$10/ton from last week citing still high feedstock costs. “We didn’t accept this request given the generally weak global trend. We are not planning to replenish our stocks for now considering slow local demand,” he informed. “We received VND500/ton (US$24/ton) decreases from a trader on the week but we have sufficient inventories for now. End product demand is not strong and we are using up to 20% recycled materials to save on costs,” a bottle maker stated. Another one noted, “End demand might pick up by October. Our local supplier complains about making losses due to high feedstock costs. However, lower crude oil prices, muted demand and competitive import offers may prevent any gains for PET.” According to ChemOrbis, a bottle manufacturer in Malaysia already secured sufficient inventories for next month and plans to purchase for October-November if he can find competitive prices. Most Chinese producers are lowering their production rates which might eventually weaken upstream demand, he thinks, while upstream costs may not be able to move up, according to him. Spot PTA prices held stable week over week, while MEG costs lost US$15/ton on CFR China basis. Spot PX prices declined US$30/ton in the period on FOB South Korea basis.