PET production margin in Asia flips to negative for the first time in 2 months

21-Jun-13

As Chinese produces cut PET offers to reduce inventories, Asian polyethylene terephthalate (PET) production margin flipped to negative territory early Wednesday. This is for the first time since the Asian close on April 17 that margins have moved into negative, as per Platts. The Northeast Asian PET margin was pegged at -US$19.70/mt early Wednesday, compared with +US$6.24/mt at the Asian close a week ago. This calculation takes into account price of feedstock purified terephthalic acid (PTA) and a conversion factor of 0.86; cost of monoethylene glycol (MEG) and a conversion factor or 0.34; and a production cost of US$150/mt. FOB Northeast Asia PET price was pegged at a seven-month low of US$1370/mt early Wednesday, down by US$20/mt week on week. MEG was pegged at US$965/mt CFR China, up US$20/mt from a week ago, while PTA was pegged at US$1060/mt CFR China, down just a dollar from a week ago. Chinese PET producers reduced their offers to US$1360/mt FOB China this week, compared with US$1370-1380/mt last week. Meanwhile, South Korea-origin material was heard to have traded at US$1440/mt FOB Korea this week. Hainan Yisheng Petrochemical's 1 mln tpa PET plant in Hainan province is scheduled for start up in early July. Market sources reveal that Chinese PET producers are trying to sell their inventories ahead of that in anticipation of a further drop in PET after the startup.