PET bottle prices in China posted a fresh round of losses last week despite a cautious rebound in oil futures. This was because demand remained subdued amidst the approaching holiday season, oversupply concerns, economic worries and lower PTA and MEG prices.
PET defies oil rebound
Crude oil futures recovered from their multi-year lows at the end of December as a result of the declines in output from major producers. The PET market, however, have shrugged off the oil rebound so far, with buyers maintaining their cautious stance.
A trader based in China applied fresh declines of $15-20/ton on his PET offers to export markets last week. He noted, “PTA and MEG prices are lower, keeping buyers sidelined. In addition to this, oversupply concerns across the globe continue to dampen demand.”
Approaching holiday season weighs on trading in China
Inside China, local PET prices also registered further decreases last week. Several players concurred that they expect to see lower consumption in January because of the approaching Chinese New Year Holiday.
“The winter season in the Northern Hemisphere is another factor weighing on the overall market activity,” a Chinese seller added.
Economic worries deepen after PMI data
The National Bureau of Statistics of China announced that the country’s manufacturing sector Purchasing Managers’ Index (PMI) for December was down by 0.6% from the previous month at 49.4%, marking the first contraction since July 2016.
“Manufacturers refrain from any large scale purchases amid the negative economic news. The sentiment is likely to remain weak over the short term,” a trader noted.
Export offers from China hit lowest since Nov 2017
According to data from ChemOrbis Price Index, the weekly average of PET prices on FOB China basis hit its lowest levels since November 2017 following the latest round of price reductions. The market has been tracking a downward trend for the past three weeks after it displayed a short-lived rebound in around early December.
South Korean PET at one-year low
Export PET prices from South Korea also recorded additional drops last week, reaching their lowest levels since January 2018 based on weekly average data from ChemOrbis Price Index.
A source from a Korean producer reported, “We cut our export offers by $20/ton in the face of lower PTA and MEG costs. Demand from our European customers has been quite limited given their year-end holidays.”