Correction in upstream market drag Southeast Asian PET lower

The Asian PX market that was riding the high tide to the record high levels during late August amid strong demand from the fiber sector, which prompted expectation that market would remain strong with additional support from tightening supply. However, the brief rebound did not sustain. Asian PX costs based on CFR China/Taiwan fell $108/ton in a period of 7 days to $1264/ton on 20 September 2018, according to CommoPlast data.

Sources reported that the quick escalated in PX prices has discouraged fiber buyers to procure additional materials to protect profit margins. “Many fiber plants in China has cut operation rate due to high input costs. This resulted in excess supply for PX. We expect the market to regain stabilization soon,” a market source said.

In the meantime, MEG costs based on CFR China fell $113/ton from the beginning of September while PTA dropped $45/ton. The combined effect is dragging the regional PET bottle market lower. 

Data from CommoPlast showed that the average import PET prices to Southeast Asia plunged nearly $50/ton week on week, sending the latest price range to $1350-1380/ton CIF, LC AS term.

“Demand is very weak. Most of our customers are waiting for further correction before making decision,” a trader offering Chinese PET at $1350/ton to Vietnam said. 

Players are hoping that the current trend is just a technical correction following a frantic price hike in the past week. “Downstream buyers shall come back soon in preparation for the high demand season,” another trader added.