Quotation
Global PET Production Dynamics: Cost-Driven Trends and Supply Pressures
Geopolitical Factors Impacting Oil Prices
The uncertainty surrounding geopolitical dynamics has intensified concerns over oil prices. Despite some initial expectations that Donald Trump's re-election might ease Middle Eastern tensions, the situation has failed to improve substantially. Since last weekend, the Russia-Ukraine conflict has intensified, facing the threat of further escalation, which has rekindled market risk aversion. As a result, oil prices have remained elevated, causing polyester raw material prices to follow suit. This trend is likely to continue, with raw material prices exhibiting an "easier to rise than to fall" pattern due to the persistent cost-driven nature of market fluctuations.
On the demand side, the polyester market is experiencing moderate stability. A gradual recovery in textile orders and consumption is providing some support to the market, enabling polyester plants to maintain high operating rates. However, the overall uncertainty in the global economy has led to a cautious market outlook. As a result, price movements are predominantly influenced by cost factors rather than demand dynamics.
Production Cuts in China and Europe
In addition to rising material costs, more PET resin bottle grade manufacturers are implementing production cuts. China, the world’s largest producer of PET chips, is seeing several manufacturers, including Wankai and Baihong, scale back production. Maintenance schedules in major Chinese facilities, including those of China Resources and Sinopec, will also contribute to a temporary reduction in output. These shutdowns are expected to reduce the overall operating load of polyester plants in China to around 76% in December, aligning with the year’s average.
In the European and American markets, the fourth quarter has seen a rise in annual maintenance plans for PET production facilities. Companies like Alpek in the UK and Equipolymers in Germany have announced shutdowns, while new production capacities are being phased in. Furthermore, Mitsui Chemicals in Japan, the only producer of polyester bottle chips in the country, plans to permanently close its plant in 2024.
The reductions in production capacity in China and Europe are expected to exacerbate supply tightness, further affecting global polyester bottle chip availability. The ongoing geopolitical uncertainty and fluctuating raw material costs will continue to influence the market, with the risk of higher prices and more volatile supply conditions.
Conclusion
As the polyester market remains highly sensitive to raw material costs and geopolitical dynamics, it is essential for customers to remain vigilant. By monitoring market developments closely, customers can adapt their procurement strategies and supply chain operations to mitigate the risks of supply disruptions and price volatility. Flexibility will be key in navigating these turbulent conditions.
Reference
2.CCF| Polyester: Rising Costs with Cautious Downstream Outlook