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Demand for PET bottle in China and Southeast Asia is regarded as soft at the moment as most markets in the Northern Hemisphere are entering the winter season. However, prices are not responding to the softness in demand, as tightening supply and high production costs continue encouraging suppliers to implement new hike on latest price announcements.

In fact, offers for Indonesian and Chinese PET to Vietnam this week gained $30/ton week on week, reaching $1170/ton and $1100/ton respectively, all based on CIF, LC AS term. “Our customers are not even interested in placing bids. Prices has surged above market acceptance levels,” a distributor said.

In the upstream market, several PTA plants in China shutdown, in addition to strong demand from the polyester sector has sent PTA costs to multi-years high levels. Compared to beginning of November 2017, PTA costs based on CFR China term surged nearly 10 per cent to $720/ton. The condition is expected to persist in the near term, sources said.

Strong upstream costs make it less economical sense for PET bottle producers to operate, leading to a series of production rate cut, which caused a big blow to the general supply. A list of plants adjusted production rate in China is shown in the following table.

With these production disruptions, sources are expecting the current firming trend to sustain throughout January 2018 citing the lack of inventories pressure. However, demand is not providing much support, which might limit the extent of any drastic hike.