China PET Resin Bottle Grade Market Resilient After Holiday

Industry operating rates held relatively steady during and after the holiday at around 76.2% of total designed capacity of 21.47 million tons/year, largely unchanged from before the holiday. Yisheng Petrochemical's 500,000 tons/year Hainan facility and Tenglong's 250,000 tons/year unit resumed operations ahead of the holiday, though some plants have since scheduled maintenance, keeping supply in check. Capacity utilization is expected to recover to 80% or higher by mid-to-late March.

Inventory levels at PET bottle grade plants accumulated over the holiday due to logistics disruptions and reduced downstream offtake, with stockpiles rising by 4-10 days from pre-holiday levels to average around 15 days, based on preliminary statistics. However, with freight activity normalizing, plants are poised to destock, potentially limiting February's social inventory build to within 100,000 tons, followed by a drawdown of over 100,000 tons in March-April.

Order books remain robust, with some major producers already sold out for the first quarter, raising the prospect of supply tightness by late February to early March. Export orders stayed stable during the holiday, though prices for long-haul cargoes are yet to be finalized due to logistical constraints.

Downstream small and medium-sized enterprises are returning to operations earlier than previous years, with most preparing to start by Feb. 15, and some even urging PET bottle grade deliveries—a stark contrast to past years when restarts typically extended to the tenth day or later.

Market Outlook

The market's trajectory will likely hinge on feedstock costs and the timing of downstream restocking. Upstream crude oil and overseas feedstock prices have firmed over the holiday, underpinning producers' strong willingness to support prices. However, with processing margins already elevated pre-holiday, further upside may be limited without downstream follow-through buying.

If polyester feedstock prices remain steady and downstream buyers launch a concentrated restocking spree, PET bottle grade prices could edge higher. Conversely, rapid gains lacking demand support may trigger corrections. Market participants are advised to monitor plant operations and trading activity this week and next for cues.

From an inventory perspective, first-quarter destocking may be modest, with a possibility of slight accumulation versus late 2024. But with the foundation laid in Q1 and peak procurement and consumption seasons approaching in Q2-Q3, social inventories are expected to trend lower over the medium term.

Source: CCF