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Insight | Time: Jun 22 2022 4:00PM  Editor:Alex Hua
PET bottle chip market in new round of replenishment cycle with prices falling to periodical low
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Recently, with PET bottle chip prices falling back to the pre-hike level, downstream terminal manufacturers began to replenish large orders one after another this week. According to CCFGroup statistics, in only two working days, it is reported that at least four or five large-scale enterprises have purchased a total of more than 100,000 tons through tenders.



At present, there is a relatively strange phenomenon in the industry. On the one hand, large downstream factories continuously replenish large orders, and forward goods are basically locked. Factory supply is gradually reduced. From CCFGroup鈥檚 previous research, most beverage manufacturers have replenished goods to end July and mid-August, and there are few to restock in advance for the fourth quarter. Oil factories mostly have July demand, and sheet plants are mostly wait-and-see. So purely from the perspective of rigid demand, downstream beverage and oil factories have a relatively high probability of replenishment in the last two weeks of June.

On the other hand, some PET bottle chip factories have been repeatedly selling a small number of high-priced spot goods, while most traders need to queue to pick up the goods, and it is reported that many traders' May-June orders have not been fully picked. We guess that is because some bottle chip factories failed to lock enough raw material at low pricing in advance, and players are doing this to preserve their processing spread, so there is such a practice. In addition, the real supply in the market is mostly concentrated in the hands of several traders. In this way, although raw materials futures prices are still falling, the market price of bottle chip is relatively stable and some trader quote even slightly moves higher this morning.

At the same time, why do some traders pick up the offer when they know in advance that the factory is repeatedly selling spot goods? It is necessary to talk about the situation that there are more short orders in the early stage. Due to weaker demand and strong bearish sentiment in the market under epidemic control in China, many small and medium-sized traders only felt weak domestic demand, but did not find changes in overseas markets in time, when export shipments continued to remain high, so most of them did not replenish their positions in time, so they had to replenish goods continuously from the market or factories to reduce the risk of losses.

Generally speaking, downstream end-user factories and most traders all need to cover short, PET bottle chip market has gradually ushered in a new round of replenishment cycle. If this round of replenishment is relatively strong, the market price of PET bottle chip may have reached a periodical bottom. Of course, market participants also need to timely follow up some external indicators, such as international crude oil price and geopolitics etc.

[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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