Since mid-April, the focus of the polyester bottle flakes market has fluctuated upward. Since then, the polyester bottle flakes market has ended its downward trend since July 2019. The trend began to bottom out and rebound.
Figure 1 Market price trend chart of polyester bottle flakes
Source: Longzhong Information
Since mid-April, the polyester bottle flake market has rebounded slightly. The price center of gravity continues to climb. In early April, polyester bottle flakes in the East China market were dragged down by negative oil prices and fell to a record low of 5050-5150 yuan/ton. However, with the active resumption of work and production, the downstream soft drink industry has accelerated shipments, the sheet industry is booming, and the spot supply of bottle flakes has tightened. The polyester bottle flake market ended its downward trend since July 2019 and began to bottom out and rebound. The market for polyester bottle flakes is recovering this time. The editor summarizes that it is mainly due to the following three reasons:
First, the industry is operating at a low level and the spot supply of bottle flakes factories is tightening. In February, due to the impact of public health incidents, the overall operating capacity of polyester bottle flake manufacturers dropped to 62.52%. A decrease of 16.1 percentage points from the same period last year. It was not until mid-April that the bottle flake factory load steadily picked up. As of June 2020, a total of 1.3 million tons of new production capacity have been put into operation (600,000 tons in Chongqing Wankai and 700,000 tons in Dalian Yisheng Phase II). Let’s take a look. The unexpected shutdown production capacity totals 1.45 million tons (Jiangyin Chenggao 600,000 tons, Anyang Chemical 300,000 tons, Wuliangye 150,000 tons, Shanghai Yuanfang 400,000 tons). Since Jiangyin Chenggao was only 50% operational during the same period last year, when we calculated the shutdown capacity, Chenggao was calculated as 600,000 tons. Based on the comparison, it is obvious that the production capacity this year has decreased by 150,000 tons compared with last year. At present, the overall operating capacity of the bottle tablet industry is at 74.94%, which is a decrease of 14.8 percentage points compared with the same period last year.
Figure 2 Comparison of monthly production start-up of polyester bottle flakes
Source: Longzhong Information
Secondly, foreign trade has a slight impact, but domestic trade is not. The other waxes and wanes. Overseas public health incidents began to spread in mid-March, and early orders had little impact. From January to April 2020, the export volume of polyester bottle flakes (39076110) was 898,000 tons, a decrease of 219,500 tons compared with the same period last year. From January to April, domestic polyester bottle flake production was 2.6861 million tons, a decrease of 221,800 tons compared with the same period last year. Domestic demand, the start-up of the main downstream traditional soft drink industry has gradually increased, and the number of shipments has increased day by day. Demand in the field of protection is surging, and the sheet industry is booming in both production and sales. Oil demand remains stable. Domestic demand overall decreased slightly compared with last year. So far, the start-up of mainstream soft drink companies has increased by about 5 percentage points compared with May, and some factories have been operating at full capacity.
Finally, cost-side PTA support: PTA prices fluctuated upward under the pressure of huge inventory. However, the demand for polyester is growing steadily, giving PTA confidence and support. Specifically in June, polyester is still expected to be put into production around 1.1 million tons (Yisheng 50, Shenghong 25, Yizheng 10, Hengyi 25), and the expected production capacity for the restart of early maintenance equipment is about 1.27 million tons (Anyang 30 Yuan) Fang 40 Quandi 7 Rongsheng 40 Tianhua 10).
Judging from the current demand situation in the terminal industry, export orders are still overall weak, and the turning point may appear in July-August. However, as college, middle and primary school students across the country return to school, domestic end consumer groups are picking up, and the peak season for the domestic bottle tablet market is approaching. At the early low level, there are many speculative demand orders, and the polyester bottle flake market has potential risks of decline. However, the persistence of hot weather will inevitably drive up the consumption of bottled soft drinks. Considering that the supply of goods from major terminal manufacturers has basically been locked in advance, the future upside potential may be limited.
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