[Daily Recycled PET Review] Feedstock Continues to Decline, Market Remains Temporarily Stable in Consolidation

1. Today's Summary

Today, the domestic recycled PET market remained broadly stable, with supply and demand locked in a stalemate. Upstream polyester feedstocks both declined, leading to a notable drop in polymerization costs. Prices of virgin polyester chips continued to fall, further narrowing the price gap between virgin and recycled materials and weighing on trading sentiment in the recycled market. Downstream demand from recycled chemical fiber end-users remained weak, with factories facing sluggish production and sales and only replenishing raw materials cautiously based on immediate needs. Meanwhile, upstream baled bottle supply was tight, washing plants had thin profits, operating rates remained low, and sellers were reluctant to offer at low prices. Amid the tug-of-war between bullish and bearish factors, recycled PET prices stayed stable, while overall trading activity was average.

2. Spot Market Overview

In terms of spot prices, the prices of recycled PET bottle flakes in major domestic regions remain stable, without any fluctuations. The mainstream quotation for Jiangsu's pseudo-Dahao pure white flakes is 4,700 yuan/ton; Zhejiang and Guangdong's 3D-grade cold-washed blue and white flakes are quoted at 4,200 yuan/ton; Shandong's 3D pure white flakes at 4,500 yuan/ton; Hebei's cold-washed blue and white flakes at 4,000 yuan/ton; and Fujian's hot-washed blue and white flakes at 4,600 yuan/ton. Prices for downstream recycled chemical fiber products are also stable, with Jiangsu's 1.4D pseudo-Dahao polyester staple fiber at 5,950 yuan/ton and Zhejiang's 3D 7D siliconized staple fiber at 6,100 yuan/ton.

In terms of raw material costs and the market for virgin polyester, today the polyester raw materials both weakened. PTA spot price dropped by 65 yuan/ton to 5960 yuan/ton, and ethylene glycol fell by 106 yuan/ton to 4362 yuan/ton, resulting in a polymerization cost of 6557.07 yuan/ton, a daily cost decline of 90.09 yuan/ton. The virgin polyester chips also saw a simultaneous decline, with semi-dull chips falling to 6930 yuan/ton and bright chips dropping to 7030 yuan/ton. The continuous price drop of virgin materials is compressing the premium space for recycled materials.

In terms of production and market transactions, the weekly capacity utilization rate of the recycled PET industry this week is 43.2%, unchanged from the previous week. The industry's daily processing profit remains at 200 yuan/ton, while raw material prices have slightly increased against the trend, and finished product prices have stabilized, leading to a passive narrowing of processing profits. Downstream fiber manufacturers are facing pressure on shipments and have a strong mindset of cost control and price reduction, with no concentrated replenishment actions. The increase in the recovery of waste bottles at upstream packing stations is limited, and cleaning plants are having difficulty procuring materials, unwilling to sell at low prices, resulting in a lackluster market transaction.

3. Market Forecast

In the short term, China’s domestic recycled PET market is expected to remain in a narrow consolidation range, with no clear direction for price increases or declines. On the bearish side, the continued decline in international crude oil prices is weighing on the polyester industry chain, while virgin polyester chip prices continue to weaken, further narrowing the price spread between virgin and recycled materials. In addition, weak off-season demand from downstream end-users means that just-in-time purchasing by fiber producers is unlikely to provide meaningful support to the market. On the bullish side, tight supply of collected bottle scrap and reluctance among upstream washing plants to sell at low prices are providing support to the price floor of recycled bottle flakes. With both supply and demand locked in a stalemate, recycled PET is unlikely to see much room for either gains or losses in the short term, and is expected to maintain a sideways consolidation trend.

Editor: Abby

Source of data: Longzhong