【PET Monthly Review】Down 193! Prices Plunge Sharply, PET Market May Remain Weak in April

1. Hotspot attention this month:

1) The U.S. plans to impose additional tariffs on multiple countries, with trade dispute risks resurfacing; the U.S. officially engages in talks with Russia regarding peace negotiations on Ukraine-Russia issues, easing geopolitical pressures.

2) PET bottle chips: Yizheng Petrochemical's 500,000-ton/year plant restarts, and Hainan Yisheng's (600,000 + 500,000) tons/year maintenance units resume operations successively.

2. Analysis of the PET bottle chip market this month

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In March, the market price of polyester bottle chips plummeted, with the mainstream cargo prices ranging between 6,000-6,280 yuan/ton. In the early part of the month, concerns over the U.S. tariff hikes weighed on global demand, causing oil prices to fall from their high levels. The collapse of cost support led to a rapid decline in the market price of polyester bottle chips. Downstream buyers and traders replenished stocks at lower prices, leading to an increase in trading volume. In the middle and late parts of the month, oil prices rebounded, but as terminals were mostly digesting inventories, the polyester bottle chip market lacked upward momentum and adjusted within a range. By the close on March 31, the monthly average price in March was 6,101 yuan/ton, down 179 yuan/ton from the previous month, representing a decrease of 2.85%.

3. Upstream situation:

PTA: This month, the PTA market experienced a price increase followed by a decline, with processing fees being compressed. In the first half of the month, prices generally rose, but during the Spring Festival, the U.S.-China-Canada-Mexico tariff policy triggered trade risks, and the softening of crude oil weakened cost support. After the festival, as the U.S. imposed export sanctions on Russia and Iran, and domestic refineries reduced their operating rates, coupled with low PTA processing fees, expectations for more maintenance shutdowns increased. The supply-demand balance improved from February to March, leading to a dual rise in market prices and spot basis. In the latter half of the month, the market declined as gasoline and aromatics-related premiums were eroded, and with the smooth progress of Russia-Ukraine peace talks, crude oil prices fell. The maintenance of PX units was delayed, and after the Lantern Festival, negative feedback from the terminal market continued to intensify. Against the backdrop of weak external macro conditions and weak industry fundamentals, with cost and demand remaining weak and PTA social inventory difficult to digest, market prices gradually corrected, and the spot basis weakened again.

In March, the Chinese ethylene glycol market experienced a decline in price levels due to a lack of peak season demand and difficulties in reducing supply inventories. The monthly average spot price of ethylene glycol in Zhangjiagang was 4,519 yuan/ton, down 186 yuan/ton or 3.95% month-on-month, and down 3 yuan/ton or 0.07% year-on-year. In the first half of the month, influenced by the decline in crude oil and coal prices, the overall cost structure of the market collapsed. Given the expectation of high industry operating rates and weak performance in the downstream polyester sector, port inventories fell but then rebounded. The marginal improvement in supply and demand was unsustainable, leading to insufficient market confidence and downward pressure on prices. The spot price dropped to around 4,430 yuan/ton. In the latter half of the month, driven by a rebound in crude oil prices, market sentiment improved slightly, and prices recovered to around 4,500 yuan/ton. However, as downstream polyester plants began to reduce production ahead of schedule towards the end of the month, concerns about April demand resurfaced. With no support in sight, prices fell again to around 4,450 yuan/ton.

4. Market Outlook for Polyester Bottle Chips Next Month:

Supply forecast: The Yisheng Dahuahua 700,000 tons/year facility is expected to restart in early April, and there are expectations for a new facility in East China to commence production. There are currently no maintenance plans for any facilities. It is expected that polyester bottle chip production may increase to 1.47 million tons in April.

Demand Forecast: From the perspective of the downstream soft drink industry, the Q1 production targets have been met, but terminal inventory pressure persists, compounded by weather impacts. It is expected that the operating rate in the soft drink sector may narrow slightly to 65-85% in April. The PET sheet industry continues to operate at a low level, projected to remain at 45-80%. The operating rate in the edible oil industry is estimated to range between 38-56%.

Price Forecast: The polyester bottle chip market may remain sluggish in April. On the raw material side, PX prices are strongly supported during the maintenance season, but TA and EG performance is average, resulting in insufficient cost support. On the supply side, previously shut-down plants have gradually restarted, and new plants have been put into operation, with no new maintenance units appearing, leading to a significant increase in expected supply. On the demand side, weather conditions remain stable, downstream soft drink pickups have slowed compared to the previous period, and after completing the first-quarter plan, industry operating rates have mostly declined. Under the supply-demand imbalance, the polyester bottle chip market is expected to be weak and volatile in April, with spot prices for water bottle materials in East China projected to range between 5,950-6,150 yuan/ton. Attention should be paid to changes in plant operations after processing fees are compressed.