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Insight | Time:Nov 22 2017 2:10PM
PET flake price to sustain hiking
 
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In recent days, as it gradually turned cold, supply sharply declined. Re-PET price, after the fall since late Sep, rebounded in end-Oct or early Nov. Till now, the price has hiked 300-500yuan/mt in most areas and 600yuan/mt in Guangdong, to a level of just 100-200yuan/mt lower than the previous high.

In the coming days, re-PET is expected to sustain rising to the level eve beyond the record high.

Supply crunch
As the consumption sustained dropping due to lower temperature, the recycling volume of PET flakes also greatly fell. Flake cleaning plants in North China found it hard to operate and sources sold to the market were limited. Continued price hike of flake in Hebei was a reflection of local tightness. The same for the market in South China. Supply was so tight that concerns over the supply even extended to the first half of 2018. Plants had to procure sources in advance for production.

Tolerable price spread of PET flake and chip

In recent days, the price spread of PET flake and chip sustained around 500yuan/mt, higher than that in Sep-Oct and a level that was well accepted by the market. And as previously virgin PET chip cash flow has obviously fell due to firm polyester feedstock, its price is unlikely to fall. Suppose a spread of 300yuan/mt, there is still room for the price hike of PET flake.

Policy concerns
On Nov 16, Li Ganjie, the chief of the Ministry of Environmental Protection addressed at a conference that local governments shall in the spirit of protecting the environment, devote to implementing the landmark policy of banning the foreign garbage. On the basis of the spirit of the conference, it can be argued that any government review of license for importing PET waste, parings and scraps is to remain hard. Previous rumor that the import of clean flakes may be allowable may not stand. And it is very likely to see a sharp fall of PET flake imports next year, which will firmly back its price.

Thus on the whole, despite that recycled polyester market was relatively weak recently, the dramatic fall of supply may still be the driving force for the price hike of PET flakes.
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