Last Week's Polyester Market Highlights: Raw Material Price Volatility and Strong PET Pricing

Upstream dynamics

Crude oil prices experienced initial declines followed by a rebound but overall weakened, directly impacting the polyester raw materials market, particularly PX prices.

PX prices showed a slight weakening trend last week in line with crude oil fluctuations. PX prices fell by 1.1% week-on-week to $1026 per ton CFR on last Friday, with PXN (paraxylene-naphtha spread) maintaining a low level of $330 per ton. Despite the end of concentrated maintenance of PX units in China and some unexpected unit maintenance, the load of Chinese PX units reached its highest level in five years, increasing supply pressure. Reduced polyester demand affected raw material demand, but PTA cash flow remained strong with high loads, providing support for PX demand. PX prices are expected to continue fluctuating weakly in the short term.

PTA prices fluctuated after last week's decline, with some PTA units resuming operation and loads rising to about 80%, increasing supply pressure. Downstream PET plants reduced output, resulting in moderate PTA spot trading volume and reduced inventory clearance. Strong main port differentials due to hot weather affecting unloading speeds continued, with regional differentials still evident. In the short term, with unit restarts and downstream polyester production cuts, the PTA supply-demand relationship is under pressure, but logistical impacts and some planned unit maintenance provide support. PTA prices are expected to fluctuate mainly in line with cost factors.

MEG prices remained firm and rose last week. Despite reduced demand due to downstream polyester production cuts, supply also decreased simultaneously, with major port inventories continuing to decline. The MEG supply-demand structure is expected to remain relatively balanced in the short term, supporting prices.

PET bottle grade market dynamics in China

Last week, the PET bottle grade market in China showed strong price support due to multiple factors. Since late May, the processing interval for PET bottle grade has been compressed for a long period, with factories operating under extremely low profitability and worsening losses. New orders in China performed poorly, although export orders remained considerable. However, tight supply of export containers in May led to delayed shipping schedules and increased freight rates, making it difficult for PET bottle grade factories to ship exports, exacerbating pressure on domestic shipments and rapid short-term increases in factory inventories.

Following a week of joint price support efforts by the industry, PET bottle grade factories in China have begun to implement planned production reductions. As of now, the average operating load of domestic PET bottle grade units has dropped to below 75% (based on a designed capacity of 18.83 million tons). Under this strong price support sentiment, low-priced PET bottle chips have slightly converged, with processing intervals rising modestly to around 450-500 RMB/ton. As factories continue to implement planned production reductions, supply of certain specifications is expected to tighten, and processing fees are expected to gradually recover.

Market Outlook

Looking ahead, the PET bottle grade market will continue to face challenges, with factories expected to maintain price support strategies. However, market demand and external factors may lead to price adjustments in the short term.

Source: China Chemical Fiber Information Network