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Insight | Time: Dec 2 2019 10:33AM
High-end PET flake market change in China
 
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In recent two years, market players pay high attention to the high-end environmental products. The high-end re-PET products, 3A-grade flakes also lure much attention. Due to its large price spread with conventional PET flakes and considerable profits, lots of plants put the investment and upgrade the equipment to produce the products. However, viewed from current market situation, its supply and demand relationship has changed evidently.

Prices of 3A-grade white flakes have declined from 9,500yuan/mt at the end of the first quarter to 7,000yuan/mt at present, a decrease of 2,500yuan/mt. For conventional blue and white flakes for HC re-PSF, dragged down by lower virgin polyester fiber and continual lower of recycled chemical fiber, prices declined from 7,000yuan/mt in early 2019 to 5,100-5,200yuan/mt currently, with a decrement less than 2,000yuan/mt. By comparison, the decrement of 3A-grade white flakes was larger. Recently, conventional PET flake prices were basically flat, while 3A-grade white flakes continued to move downward.

The lower virgin polyester fibers is an important factor for the decline of 3A-grade white flakes, but the soaring number of producers and sharp increase of output are the major reasons for the decrement. According to CCFGroup, the output of high-end re-PFY is about 500 tons per day, less than 200kt in the whole year. Though the demand for high-end flakes increases with the higher demand from downstream market, the supply of high-end flakes has been excessive in China. Barring the old plants of Jiali and Yongxing, some other plants, like Guangdong Tuozhan, Huafei and some small cleaning plants also start to produce high-end flakes or invest more on it. In 2019, the output of high-end flakes increases sharply, and oversupplied situation begins.

Of course, with the effort on the recycling rate later, and continual expansion on high-end re-PFY, the demand for high-end PET flakes keeps increasing. On the other hand, for cleaning plants, there are no profits for conventional PET flakes, and many may turn to produce high-end flakes, which may lead to excessive supply. The profits for high-end flakes may continue to shrink in the future.
[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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