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Insight | Time: Jun 26 2019 11:28AM
How long can PET flake rebound last?
 
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International crude oil prices rebound quickly recently stimulated by the macro news and geopolitical tensions. PTA futures surge, following the polyester products.

SD PET fiber chip prices moved by 700yuan/mt from 6,500yuan/m to 7,200yuan/mt amid the good sentiment. For PET flakes, prices have been constantly decreasing since the early 2019, especially in early May, prices decreased quickly due to lower recycled chemical fiber and PET fiber chip prices, once down to 6,000yuan/mt, a two-year low level. The price spread between PET flake and PET fiber chip enlarged evidently. During the period, many plants cut production or suspended operation in slack season, and with the pessimistic anticipation towards the late market, plants were not active to purchase feedstock, mainly to control the inventory. Therefore, with the limited feedstock inventory, and stimulated by the sharp rise of PET fiber chip, PET flake prices moved up, and the supply tightness was more obvious.

The price spread between PET fiber chip and PET flakes once enlarged to nearly 900yuan/mt, returned somewhat after PET flake prices rose, but still above 600yuan/mt, which was a relatively high level.

The rise of recycled chemical fiber prices was mainly pushed by the uptrend of PET fiber chip and PET flakes. However, the procurement of downstream plants and traders was mainly for building stocks, and the feedstock has not consumed actually. In other word, the feedstock was just transferred to downstream plants or traders’ hands, as end-user market has not improved obviously.

In general, PET flake prices have been high currently, though there is certain price spread with PET fiber chip, and supply remains tight, the downstream recycled chemical fiber market is still unsmooth, and the increment is smaller than that of feedstock, so the cash flow is squeezed again. Therefore, PET flake prices lack support in short run, and the upward space is supposed to be limited.
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