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Insight | Time: Jun 24 2020 10:01AM
Bottle bales prices move lower amid increasing supply
 
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Recently, bottle flakes cleaning plants in Hebei, Shandong and Fujian and some recycled chemical fiber plants reflect that PET flake suppliers show higher enthusiasm for sales. Bottle bales supply increases obviously, and purchase prices move lower generally.

In Hebei, purchase prices of bottle bales have declined for two days. Prices of three-color bottle bales decline from 3,500yuan/mt to 3,300yuan/mt, and supply has not reduced after prices decline. In Fujian, supply is large when buyers purchase bottle bales at 3,200yuan/mt, and then, buyers revise lower the prices to 3,000yuan/mt.

Then, why do bottle bales prices decline recently? 

First, with higher temperature, the consumption of soft drinks in the market has increased significantly, and the recycling volumes of bottles increase.

Second, the recycling and packaging plants face large capital pressure, and some suppliers even have large inventory at hand. In need of the capital recouping, they tend to liquidate stocks.

Third, although the virgin polyester products have rebounded from the previous period, the prices of solid re-PSF and HC re-PSF are difficult to improve, with limited profits. Therefore, buyers have to lower the raw material purchase price to ensure profits, and some suppliers are eager to sell products as buyers keep cutting the purchase prices.

Fourth, high-end and eco-friendly re-PFY and re-PET chip markets are dull. 3A-grade white flake prices have been constantly decreasing, and profits are squeezed obviously. Therefore, buyers revise lower the purchase prices.

In general, the entire recycled industrial chain in a relatively sluggish development situation in the first half of 2020. Recycled market faces the impact on demand caused by COVID-19 pandemic, squeeze from virgin polyester markets under low oil prices, and the lower market shares affected by the capacity expansion of virgin polyester fibers.
[RISK DISCLAIMER] All opinions, news, analysis, prices or other information contained on this report is provided by analyst of Zhejiang Huarui Information Consulting Co., Ltd (CCFGroup) as general market commentary and does not constitute investment advice. CCFGroup will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.
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