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Insight | Time:Jan 23 2018 3:46PM
PET flake price to hike beyond current ceiling
 
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Since May of 2017, impacted by tough environmental regulation and solid waste import ban, PET flake price has enjoyed ever-intensive surges. The price of hot washed blue and white flake for HC re-PSF, for example, spiked from 5,150yuan/mt to 6,900yuan/mt in end-Sep and then mildly fell and later hovered around over 6,500yuan/mt, pre-tax, ex-works.

Since the beginning of 2018, backed by firmed crude oil, polyester feedstock hiked all the way. And as the Lunar New Year approaches, recycled polyester plants who have few inventory of feedstock, worried about domestic feedstock shortage and imports slump, actively restocked the sources in order to secure normal operation after the holiday. Thus price of flakes has obviously increased in recent days with that of hot washed blue and white flake for HC re-PSF prevailing at 7,000yuan/mt, a level higher than the ceiling in 2017. Some areas even saw the price hiking to 7,100-7,200yuan/mt, pre-tax, ex-works.

At such a high level, how will the price go in the days to come?

Basically stable before the Lunar New Year

HC re-PSF remained to the be most profitable product in recycled polyester fibers. Though its cash flow obviously fell from 1,500yuan/mt to 700yuan/mt, the level was still high compared with that of solid re-PSF and re-PFY, both of which were at the break-even line due to the continued hike of feedstock price.

On the other hand, downstream plants of HC re-PSF market have basically finished replenishment and trading has gradually declined in recent days. Sales of re-PFY also went subdued and its price fell. Solid re-PSF price still increased in some areas due to the increase of flake price and tolerable spread with virgin PSF, yet downstream plants mainly restocked to build up inventory, high sales rate may not sustain long.

What’s more, virgin PET chip peaked down in recent days and lacks drive to go up in the short run. And most recycled polyester plants will carry out maintenance in end-Jan and early Feb and logistics service will also stop. All these concerned, PET flake price may mainly show stable for lack of support.

Expected to rise after the Lunar New Year
The import volume of PET waste, scraps and parings totaled 710kt in the first three months of 2017 and 814kt in the first four month. However, as re-PET from non-industrial sources will be banned from importing, the volume of re-PET from industrial sources allowed to be imported will be very limited. Limited approved volume in the first four batches of import licenses is a reflection. Thus supply of the feedstock after the Lunar New Year will be severely tight. The shortage is expected to reach 700-800kt.

Besides, as flake cleaning plants will resume production later than recycled polyester plants and the consumption of drink bottles is limited during the spring Festival, domestic recycling volume can not recover soon. Given the low inventory of feedstock, recycled polyester plants may find it very hard to secure sufficient sources for production, which then will give a strong support for PET flake price.
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