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PET bottle chip export price loses edge, precaution further exports decline

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Core Tip:Recently, PET bottle chip delivery is a bit tight, due to numerous domestic sales in previous stage. Prevailing discussi
 Recently, PET bottle chip delivery is a bit tight, due to numerous domestic sales in previous stage. Prevailing discussion for PET bottle chip largely held stable at 8650-8750yuan/mt by cash EXW. Traders mainly sold goods at 8600-8650yuan/mt by cash EXW. PET export however faced with reduced new order and widening spread with overseas price level.

The smooth restart of EIPET has significantly impacted China PET market share in EU, Africa and Middle East. Till last Friday, PET price in Middle East was merely $1080/mt FOB, which is quite competitive price to enter EU, Africa and American markets. Since Feb, EU local price has been hovering around $1070-1090/mt. Factoring in import tariff and freight fee, China export price shall be at least at $1070-1080/mt, which is still far away from current $1100/mt plus level. In fact, traded price of materials from South Korea, India and Southeast Asia region all see different cutback recently, particularly against EU market.

Comparing with Asia’s major PET exporters, China mainland PET price is largely $30/mt higher, or even approaching $50/mt. Since Q4 2018, China mainland lost its price edge. In Mar, China PET bottle chip producers took in about 200kt export orders, falling 18.5% on annual basis. Looking at Apr performance, export order intake may linger around 150-200kt.

Seasonal demand may guarantee domestic sales within 1-2 months, and PET price may not likely to be volatile like feedstock, but China’s export share is losing, players need to prepare for this.

So far, PET bottle chip producers’ monthly export delivery could sustain above 200kt at least in Apr-May. Sufficient domestic sales could support PET price to be firm. But with China and overseas price level widening further, new export order intake will slow down, thus affecting Q2-Q3 export delivery. If such situation doesn't effectively enhance, we expect chance of PET bottle chip exports decline to increase in 2019, and domestic sales will face pressure when slack season comes.

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