PET prices move north on firmer feedstock costs in Asia

PET markets have been firming up in Asian markets including China and Southeast Asia, as per ChemOrbis. The region was struggling with oversupplies, but the recent PTA shutdowns at several plants in China helped feedstock prices to firm up. This encouraged an increasing number of sellers to seek higher prices both on domestic and export basis. In upstream markets, spot PTA prices rose by US$25/ton on CFR China basis during the week. PX prices were also up by US$20/ton on FOB South Korea basis. Spot MEG costs posted a larger gain of US$30/ton on CFR China basis in the same period. In China, a PET producer increased their export prices by US$40-50/ton on FOB basis citing higher PTA costs as the reason. A source at the producer said, “We are optimistic about the near-term market outlook since we have oversold our cargos for the July-August period. Local demand is relatively weaker, but this is not creating any sales pressure for us as we are able to make smooth sales to our export destinations.” A second Chinese producer offered stable to slightly firmer prices, commenting, “Our export business is performing well while local demand is not that strong. We are receiving regular orders from our overseas customers while our delivery schedule is quite tight.” A Shanghai based trader also commented that Chinese PET prices firmed up as PTA futures prices rose in the middle of this week. “We received prices as high as $1250/ton on FOB basis and offers may even hit $1270/ton or above sooner or later. The market will probably remain strong in the near term,” he said. PTA makers are planning to change their business strategy by using new price formulations based on all production costs. Indeed, there are several PTA producers trying to control the supply of PTA in the market recently which pushed PTA prices up recently, the trader further informed. Indeed, a PET producer already expressed a sell idea at US$1300/ton FOB China for next week, an increase of US$50/ton. “PTA costs jumped at least US$25/ton from last week. Although demand is still not that strong, we will need to raise our price due to higher costs,” a producer source explained. Another trader based in Shanghai reported, “PTA prices might fluctuate further these days as we heard that three producers are intending to cooperate to manage PTA supply in the market.” In Southeast Asia, a PET bottle maker from Vietnam received US$30/ton hikes from their supplier. “We plan to wait for a while more since we had purchased a good amount last week although our suppliers told us that prices are rising.” A packaging converter from Thailand also said that their business was not going badly, but the political situation in the country had an impact on end product demand. A second buyer received US$10-15/ton hikes on the week. A trader commented, “Local prices rebounded to the levels last seen in mid-May due to firm import market levels and weaker VND this week.” A Malaysian PET producer reported facing difficulties during the restart of their plant. They are not able to offer material for now although they hope to resume operations at the end of this week. “We are aware of higher PET prices from China driven by rising production costs. However, we believe that this trend will be short lived as oversupply of PET from China will create an opposite pressure on prices in Southeast Asia,” a producer source said. An Indonesian producer raised domestic PET prices by US$20/ton following increases in PTA and PX prices. “Our new price received acceptance from buyers,” a producer source mentioned. Another producer raised their PET prices by US$20-30/ton from the middle of last month. “Demand in Southeast Asia is picking up and we expect it to remain strong until mid-July due to preparation for Ramadan holidays. We may apply another US$20-30/ton increase next week given rising costs and imports offers,” a producer source said. A distributor received US$20/ton higher offers from their PET supplier this week but they are not interested in replenishing their stocks as they are not confident about the sustainability of the firming trend. A converter predicted that local prices may follow the global firming trend, adding that they see good demand from end users. “We think that the PET market will remain firm in the near term as MEG prices also soared in addition to PTA and PX gains,” he said. According to ChemOrbis, in the latest production news, China’s Xianglu Petrochemical reportedly shut their PTA lines this week while the lines have a combined capacity of 6 mln tpa. On the other hand, South Korean Samsung Total will start commercial production at its new No.2 aromatics plant by mid-July, according to market sources. The line is able to produce 1 mln tpa of PX.