Asian PET market revives on higher costs
In Asia, the PET market closed last week with higher prices while sellers were pointing to the increasing upstream costs, which recorded increases of $30/ton for PTA, $55/ton for MEG and $95/ton for PX since the beginning of April as per the pricing service of ChemOrbis. Meanwhile, an initial May MEG contract was nominated in Asia with $20/ton decreases from April.
Even though the new contract price indicates decreases, the decrease amount is smaller with respect to April, when the contract was settled with three digits decreases. Looking at the export prices out of Asia on FOB basis, overall offer ranges followed a $10-30/ton firmer trend for Chinese cargoes and they tracked a stable to $10/ton firmer trend for South Korean PET when compared with the previous week.
However, within the ranges, the individual increase amounts were higher. A Chinese producer reported being able to conclude deals with $60/ton hikes from the pre-holiday levels. Chinese players were away from their desks on April 4-5 for Tomb Sweeping holiday. A trader in Qingdao noted, “We lifted our prices in line with the higher prices asked by the producers. We still see good demand as buyers are actively searching the market for materials to meet their needs during the summer season.”
A producer, however, voiced their skepticism on demand. He commented, “We increased our export prices by $20-30/ton but we are not feeling sure about the sustainability of the current rising trend. Demand may start fading away after converters replenished their stocks during these past two weeks.”
Inside China, PET offers gained ground by CNY100-300/ton ($16-48/ton). A Chinese producer noted, “We issued CNY300/ton ($48/ton) hikes on our prices on the back of the higher upstream costs as well as our tight supply levels. We still attracted good buying interest even after our increase.” Another producer remarked, “We issued CNY200-3000/ton ($32-48/ton) increases and we are content with our trading activities. The revival in demand has resulted in diminishing stock levels at the producers’ side. We believe that prices are likely to remain firm in the face of the high season for PET applications.”
Apart from the higher upstream costs, improving weather conditions also support the market. A PET bottle manufacturer reported seeing better end product demand and added that they, therefore, run their plant at full capacity. “We expect a firmer trend to continue for the upcoming period,” he further added.
Chinese producers continue to operate with negative margins when considering their theoretical production costs based on the spot PTA and MEG prices, which gained around $20/ton increases on a week over week basis according to ChemOrbis.