Petrotahlil - Despite a lackluster outlook, PET suppliers in China have raised offers amid higher feedstock prices, especially for MEG.
“We have raised offers by $10/ton for PET resin this week amid further feedstock price increases. China’s demand remains supportive. We have also maintained PET production at a reduced rate of 85%,” a major producer said.
The price hike follows similar price increases by a large Chinese producer last week as domestic demand has been stable even as overseas demand has been subdued. Price support has also been due to supply limited by reduced production rates of 85-90% by a number of key Chinese and other Northeast Asian producers.
The weekly average of export offers on FOB China basis has moved up to $680/ton from $675/ton over the week while domestic prices have also increased $12/ton from last week to $694/ton without VAT on ex-warehouse China basis, according to data from ChemOrbis Price Index.
Hurricane Laura supply disruptions support MEG
The recent price hikes have been partly due to gains in MEG prices which have raised feedstock costs. MEG prices on the Dalian Commodities Exchange increased $30/ton from early-to-mid last week before giving up $7/ton on Thursday and Friday. Spot prices on CFR China basis, meanwhile, posted a gain of $12/ton from last week to reach $487/ton, the highest level since March.
The recent boost for prices have come amid tighter supply due to plant shutdowns in the US Gulf. Lotte Chemical’s 700,000 tons/year unit and Indorama’s 1 million tons/year unit are among the plants shut due to Hurricane Laura.
PTA prices, meanwhile, have remained at high levels amid greater volatility. PTA futures on the Zhengzhou Commodities Exchange rose $16/ton from Monday to Wednesday last week and then gave up $13/ton on Thursday and Friday.
Outlook remains uncertain
Industry players are, however, believe prospects are somewhat uncertain looking ahead due to a number of factors.
Feedstock cost support may not be maintained as MEG supply increases along with more of the shut plants in the US Gulf resuming operations after electricity and feedstock availability is restored. The recent losses in crude oil futures may also weigh on spot MEG prices, players believe.
Requirements for PET bottles are expected to moderate as the hot temperatures of summer give way to the cooler weather of autumn when there is less demand for cold drinks. Subdued demand in north China has already been noted due to rains in that part of the country.
PET supply is also slated to increase with the restart of a number of plants including An Yang Petrochemical, Wuliang Ye and Hainan Yisheng’s third phase. Additionally, more than 7 million tons/year of new capacity is due to come onstream in the fourth quarter which may cap upside, market players added.
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Source : ChemOrbis