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Insight | Time: Mar 28 2019 4:37PM
China PET bottle chip export under challenge
 
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PET bottle chip exports totaled 513kt in Jan-Feb 2019 (HS code 39076110, actual figure shall be higher), y-o-y growing 38.6%. Export order intake in Jan-Feb amounted to 600kt, up 38% on annual basis.

Q1 exports extended last year’s momentum, unlike overseas market supply shortage in 2017, the strength came from downstream stock build ahead of schedule. Since last Q4, some overseas plants have begun to negotiate Mar-May 2019 orders. At the same time, PET bottle chip price last Q4 was pegged at low rates, more competitive than other regions, thus attracting some hesitant buyers.

With overseas plants gradually restarting, bullish factors gradually faded away since Jun 2017. Looking Q1 market situation:
1.EIPET 540kt/year PET bottle chip line has been running steadily. Line 1 resumed production in Aug 2018. Line 2 may offer materials mid-Mar 2019.
2.Anti-dumping risk increases: Hosaf based in South Africa filed for anti-dumping investigation against Chinese PET bottle chip earlier some time. Indonesia government is negotiating with downstream plants whether to collect ADD over Chinese PET bottle chip.
3.Large plant restart: JBF and M&G gradually returned to normal production though faced with shutdown and bankruptcy issue previously. Thus, demand from EU and America may shrink.
4.Vietnam’s 500kt/year PET bottle chip line is operating at 80%. So far, PET export sees no anti-dumping risks and the country still enjoys zero tariff entering US and Europe markets.

China PET resin producers are to cope with big sales challenges. But with refinery integration projects gradually being launched, China’s PET industry chain match will perfect further. Plus reducing VAT, export gains more cost advantage.

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