SEA PET bottle market strengthens slightly, sustainability in question

The import PET market in Southeast Asia has been on the downtrend for nine consecutive weeks since mid of September, shredding more than USD 250/ton from its peak to an average of $1150/ton CIF Southeast Asia by the week ending 16 November 2018.

However, the market started regaining some balances this week following the brief increase in the upstream MEG costs. The question is would this be the cyclical bottom or further decreases might materialize in the coming week?  

The question is rather valid. MEG costs based on CFR China term jumped to $728/ton on Monday, 19 November 2018 thanks to the recovering in the ethylene monomer market, but quickly retreat to below the $700/ton threshold just two days later.  

“After much negotiation for Chinese PET bottle cargoes, we agreed to proceed with some purchases at $1100/ton CIF Vietnam, LC AS. We demanded lower levels but the supplier repeatedly rejected. At the moment, we are watching out to see if the firmer trend would persist,” a Vietnamese converter informed. 

Regional buyers are rather concerned about the recent plunge in the energy complex, which to some players might affect the sentiment in the downstream markets. Sellers, on the other hand, believed that the market has bottomed out and might gradually gaining momentum in the near term.

“Buyers might start buying in preparation for Lunar New Year orders, which might support the market to a certain extent. The shutdown at Thailand's Indorama would curl-tail supply and support the trend,” a seller said. 

There have been reports that the average stock levels at major Chinese PET plants stand at about 20 days, which are not too high, sources said. “The upside is there, just that it might be difficult to life prices too quickly. Some plants in China started lowering production rate in line with the environmental regulations. We have a positive expectation,” a producer added.