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Insight | Time: Nov 9 2018 11:23AM
Brief on China PET bottle chip export in Jan-Sep 2018
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According to the Customs, PET bottle chip exports totaled 2.034 million tons in Jan-Sep 2018, y-o-y growing 33.6%. Considering part of the materials of low viscosity, Jan-Sep export volume is assessed at 2.15 million tons, up 31-32% on annual basis.

In 2017, a spate of overseas plants were shut or cut back production, especially large plants like M&G and JBF which faced financial issue, causing regional supply tightness. Cancel of ADD by E.U. also helped boost China export. As a result, China PET bottle chip export volume expanded substantially in 2018, and is estimated to exceed 2.6 million tons, rising 13% comparing with a year earlier. If Q4 can sustain former 3 quarters’ momentum, the volume could approach 2.8 million tons. At least, Jan-Oct exports is of great chance to break above 2.4 million tons, looking at Oct export order intake.

Japan’s share has plunged due to anti-dumping investigations. India, South Africa, Algeria, Turkey and Mexico’s share increased markedly comparing with 2017 level.

Figure 1. China PET bottle chip top 20 export destinations (Jan-Sep 2018)
Country Export volume(KT) Y-o-y growth
India 107 49%
Algeria 102 126%
Philippines 100 10%
Egypt 98 146%
Russia (RU) 93 74%
South Africa 89 99%
Indonesia 89 6%
Ukraine 76 23%
Turkey 72 321%
Peru 68 40%
Chile 62 23%
South Korea 60 38%
Thailand 57 218%
Mexico 53 3162%
Italy 46 264%
Australia 45 29%
Malaysia 42 28%
Vietnam 42 328%
Kazakhstan 41 66%
Kenya 37 16%

Note: only calculate volume under HS code 39076110, not including lower viscosity PET chip.

The major driver responsible for the growth is overseas plants issue in H2 2017.

India increased imports from China, as local supply to domestic market reduced. Large plant in India is seeking to compete for export share, taking advantage of the foreign demand shortage, and export share once reached 60% of its total supply.

South Africa market’s growth is due to flood in Q4 2017, which led to long-term shut of local PET plants. As a result, import demand saw a periodical boom. Later with closed plants resuming, imports from China then retreated. Remarkable expansion of exports to Mexico market is primarily due to short of feedstock and local plant issue.
As for North Africa and Middle East markets, one reason is of large demand potential, as local downstream enterprises expanded rapidly. More importantly is that a spate of PET resin units were shut down in H2 2017 and local capacity base is not large. The supply deficit is actually even more obvious than E.U. and America market.

Policy side of course also boosted part of China exports. Like Italian imports of PET resin from China hiked 264% y-o-y in the first 3 quarters of 2018, as E.U. canceled anti-dumping duties. South Korea and Australia’s yearly imports from China has been increasing rapidly year by year since they signed FTA with China, with Q1-Q3 figure respectively registering 38% and 29% growth on year.

Looking at 2019, China still has some new capacity to be online, but since generally scheduled in the second half or end year, impact on domestic supply is limited. Attention could be paid to the release of 1.7 million tons new unit this year. In overseas market, as Vietnam based 400kt/year PET bottle chip line launches, plus JBF and M&G resumes production, China PET bottle chip export is projected to reduce in 2019

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