Petrotahlil :Players in the Asian PET markets began exercising caution late last week, with several considering the possibility that the current downturn may be coming to an end after a six-week period of consecutive declines.
Downtrend kicks off in early July on bearish cost-demand factors
In China, prices had been on a downward trend since early July due to the insistently weak demand and feedstock costs. On top of this, export PET prices in China slumped to their lowest levels not seen since May 2017, as previously mentioned in ChemOrbis Plastics News .
However, a Chinese trader recently stated that several suppliers have stabilized their prices, following consecutive declines. The trader also said that early discussions have suggested some volatility for the market.
Delay in certain tariffs fuels fresh hopes in markets
With the postponement of the US government’s additional tariffs on several Chinese goods, including polyester, some confidence has returned to upstream markets and discussions in the downstream markets have begun to focus on a possible stability in prices.
In addition to this recent softening in tariff policy, new hopes for trade talks were fuelled following the reports from the US officials, which suggested a resumption of substantive discussions with China.
Both sides agreed to resume trade talks in July after previous talks broke down in May.
Upstream costs volatile on lack of direction
Spot PX prices on FOB Korea basis saw a slower pace of decline last week, as shown on ChemOrbis Price Wizard. This was mostly attributed to volatile crude oil prices, which kept supplies tight in the region. Spot MEG prices, meanwhile, remained firm after rebounding from a decade-low level early last week.
Crude oil benchmarks also ended last week higher on supply uncertainties amid the ongoing tensions in the Middle East. However, ChemOrbis Price Wizard data show that the global benchmarks have remained in the bear territory despite weekly increase, with prices retreating to their lowest levels since January in early August.
Traders keep wary eye on economic data
Nevertheless, most players remained cautious in view of weaker data from major economies, stating that the current sentiment amid fears of economic recession is unlikely to tip the balance towards an uptrend.
Moreover, a trader informed that the firm discussions heard late last week met with a muted response from buyers and added that prices are currently holding their levels, with no concrete sign of a rebound.
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