PET Raw Material Futures Outlook: China's PET Resin Price Surge Loses Momentum, Prices Reversal

Raw Material Price Trends in the Past Two Weeks

MEG (Ethylene Glycol)

According to data from China Chemical Fiber Information Network (CCF), domestic MEG (China) spot prices fell from CNY 4,771/ton on July 8 to CNY 4,688/ton on July 19, marking an overall decline of approximately 1.73%. Notably, after July 15, prices dropped sharply, indicating pressures from oversupply or reduced demand. 

International MEG prices also experienced a slight decline, from USD 553/ton to USD 544/ton, a decrease of about 0.14%. Overall, the ethylene glycol price trend has been downward, influenced by reduced downstream polyester production and expectations of some plant restarts, leading to weakened market sentiment.

PTA (Purified Terephthalic Acid)

According to CCF data, the price for international PTA fell from USD 760 to USD 745, a decrease of about 1.97%. Last week, some PTA facilities resumed operations, increasing the load to 81.9% and intensifying supply pressures. Conversely, downstream polyester plant load decreased to 85.8%, exacerbating PTA supply pressures. However, some polyester factories made supplementary purchases at lower prices, and short-term logistics delays mean that port inventory accumulation will require more time. 

Also, domestic PTA (China) prices dropped from CNY 5,975/ton on July 8 to CNY 5,885/ton on July 19, an overall decline of approximately 1.51%. Despite modest price fluctuations, a clear downward trend is evident, particularly between July 15 and 17, reflecting weakened market demand.

Crude Oil Benchmark Prices

From July 8 to July 19, 2024, WTI and Brent prices both saw significant declines. WTI fell from USD 82.33/barrel to USD 80.13/barrel, a total drop of about 2.67%. Prices remained stable from July 8 to July 12 but dropped sharply from July 16 onwards. The weekly average price fell from USD 82.13/barrel to USD 81.69/barrel, while the monthly average price held steady at USD 82.14/barrel. 

Brent prices dropped from USD 85.75/barrel to USD 82.63/barrel, an overall decline of about 3.6%. Prices were stable from July 8 to July 12 but saw a significant drop starting from July 16. The weekly average price fell from USD 85.18/barrel to USD 84.28/barrel, with the monthly average at USD 85.24/barrel. These declines reflect changes in market supply and demand and economic factors affecting oil prices.

PET Industry Dynamics

Two weeks ago, due to fluctuations in oil prices and weak domestic demand, the Chinese PET resin bottle grade industry collectively implemented price support measures. Many manufacturers announced maintenance and production cut plans to reduce operating rates, which initially pushed prices up. However, this upward trend was not sustained. In the past two weeks, the weakening of PTA and MEG prices failed to provide sufficient support for PET bottle grade prices.

Last week, PET bottle grade prices fell slightly in line with the decline in raw material prices, and low-price transactions increased. Export performance for PET bottle grade remains strong but is primarily due to order backlogs from previous shipping delays.

Future outlook

Looking ahead, with the raw material futures curve expected to remain flat over the next twelve months, PET bottle grade market prices are likely to stabilize slightly in the short term following concentrated production cuts. PET resin export prices may weaken further during the September and October off-season, with price differentials narrowing. 

Despite potential continued production cuts and extended maintenance periods, the increase in new capacity and the restart of production lines are expected to further add market pressure in the third quarter.

Given the increase in new production capacities and the restart of production lines, market participants are advised to monitor third-quarter capacity changes and prepare for potential price

Sources: China Chemical Fiber Information Network (CCF) and CZapp insights