[PET Daily Review] Raw Material Costs Boost Market In A Fluctuating Uptrend

1. Today's Summary

Today, the domestic polyester bottle chip market continued its rebound, driven by the collective rise of the chemical sector. The upstream PTA and ethylene glycol both saw price increases, highlighting strong support from the cost side of the industry chain. Major manufacturers' quotes for July cargoes are concentrated at 7150-7180 yuan/ton, with Yisheng's cargo basis maintaining at 400 yuan/ton. Industry operating rates have slightly increased, with the current domestic polyester bottle chip capacity utilization rate at 72.75%. However, downstream terminal's willingness to chase prices is relatively weak, which drags down the market's upward momentum, limiting the extent of price increases.

2. Spot Overview

In terms of spot prices, the price of domestic mainstream regional bottle-grade PET chips rose in a volatile manner, with regional gains and losses diverging. In East China, the benchmark spot price for bottle-grade PET chips was RMB 6,930/ton, up RMB 30/ton on the day; South China recorded the largest increase, with quotations at RMB 7,000/ton, up RMB 50/ton; the North China market remained unchanged at RMB 6,900/ton. At present, the mainstream negotiation range in East China is RMB 6,850–7,050/ton, and the transaction range for low-priced retail cargo is RMB 6,800–6,880/ton.

In terms of spot and trading, the basis in the market has weakened. The mainstream premium for the bottle-grade PET 2609 contract is between 270-400 RMB/ton, while the premium for low-priced sources has narrowed to 210-250 RMB/ton. The rising costs are driving sellers to maintain prices, but downstream terminals remain cautious and lack the motivation to chase prices for procurement. Only sporadic transactions driven by essential needs are occurring in the market, and the circulation of high-priced sources is sluggish, resulting in an overall average trading volume.

3. Production Dynamics

The operating rate of China’s polyester bottle chip industry edged up, with capacity utilization at 72.70%, indicating a moderate overall production load. On the feedstock side, PTA spot prices stood at RMB 5,740/mt and ethylene glycol at RMB 4,145/mt. Price increases in both feedstocks pushed up polymerization costs, with the daily comprehensive cost rising by RMB 104.38/mt to RMB 6,319.24/mt. Processing margins in the industry remained thin, with the current unit profit for polyester bottle chips at only RMB 10.77/mt, leaving producers’ profitability compressed to a low level.

4. Market Sentiment

Sentiment among upstream and downstream industry participants diverged notably this week, with bearish sentiment slightly prevailing. Survey data shows that 32% of respondents are bullish, up 8 percentage points from the previous period; 40% are bearish, down 12 percentage points; and 28% expect the market to remain stable, up slightly by 4 percentage points. The tug-of-war between bulls and bears remains intense, with most intermediaries staying on the sidelines and waiting for market direction to become clear.

5. Market Forecast

In the short term, China’s domestic polyester bottle chip market is expected to maintain a fluctuating but firm trend. The bullish factors stem from improved overall sentiment in the commodities market, expectations of a rebound after the earlier oversold crude oil prices, and stronger polyester dual feedstocks providing solid cost support at the bottom. The main constraint is weak downstream end-user demand, which makes it difficult for buyers to chase higher prices in large volumes. Overall, East China water-bottle-grade bottle chips are expected to trade in the range of RMB 6,850–7,000/ton tomorrow, with close attention to be paid to the commissioning progress of new industry capacity going forward.

(Based on publicly available market data, for reference only and not constituting investment advice)