PET bottle chip price soars 5% in a single day

The first working day after the Spring Festival holiday, PET bottle chip price hiked to 6500-6600yuan/mt by cash EXW and $900-950/mt FOB Shanghai, respectively up 200-300yuan/mt and $40-50/mt, or 5% from pre-holiday level. If PET has futures market, price fluctuation of the day may have already exceeded the up limit. In terms of trading volume, production and sales of most bottle chip producers is flat. Trading volume of few large plant has surpassed 40kt.

This round of rise is mainly driven by the soaring polyester feedstock, particularly surging MEG, whose price index has risen 8.8% in a single day. Due to the temporary shutdown of refining and chemical units in extremely cold weather in North America, MEG futures hikes to the up limit on the first working day after the holiday, and the spot/EG2105 spread enlarged significantly. PTA rise is less than MEG, and PTA processing spread obviously narrowed, despite the expanding turnover. Later, if some units do undergo maintenance, PTA price may rise.

Export market is another key factor driving up the market. According to CCFGroup statistics, PET bottle chip export value began to rise since end Jan, basically one price a day. According to feedback from some factories, in merely one week to Spring Festival holiday, export order intake has reached more than 20kt. Till Feb 18 afternoon, PET resin export price index had risen 10.4% from $815/mt at end Jan to $900/mt FOB Shanghai. There are three factors contributing to the sustained rise of the export market: 1. The doubling sea freight charges has prompted some overseas downstream factories to restock ahead of time; 2. Crude oil continuously rose, pushing up cost of raw materials, hence the absolute price of PET bottle chip is expected to move up; 3. Demand for PET packaging continues to grow in some overseas regions, but local capacity is insufficient to meet the demand growth, coupled with longer shipping period affected by the epidemic, and the slow port delivery speed under the epidemic prevention policy, which further increases their import demand. Quote by some overseas plants had lifted to $920-940/mt FOB before China’s Spring Festival holiday, and raised further to $980/mt FOB or above during the holiday.

Downstream sector, large beverage plants have built stock for Q2 use, few to Q3, hence wait and see mood is heavy. As China government encouraged people to stay where they are to spend the holiday, coupled with the upgrading requirements of food packaging plus online consumption habits, large cities' fruit and vegetable consumption showed blowout growth. As a result, PET fruit boxes demand is strong. It is reported that monthly output of PET fruit boxes of a few downstream factories can reach 4000-5000 tons, so PET sheet factories return to work in advance this year, while most other downstream factories resume working around February 19. However, due to stock build before the festival and logistics companies’ early holiday under the requirements of the epidemic prevention policy, PET resin delivery situation during the Spring Festival holiday in 2021 is not as good as that of the same period in previous years. Factories’ delivery arrangement is full post-holiday, market participants could purchase appropriate amount while also rationally watch the late delivery situation.

PET bottle chip price hike is mainly from raw materials side, and bolstered by sales both in and abroad. Processing spread has expanded to 1200yuan/mt. Factory delivery may improve rapidly after the holiday, plus the supportive export order intake, PET resin price may climb up further.