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Insight | Time:May 17 2018 10:20AM
PET clean flakes import allowed again? What's its impact?
 
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On May 14, rumors went that high-end A, B and C class of clean PET flakes were allowed to be imported as common commodity. Yet as CCIB (China Commodity Inspection Bureau) and China Customs have integrated, the inspection standard and operation requirements have not settled down. It may still need 3-6 months before the new policy being enforced.

In fact, before this prevailing piece of news, various sources in domestic China have said that they are trying to advance the new policy. Yet as China has since 2017 stood very tough on solid waste import issue, it may be not appropriate to affirm that China now have reversed its previous tough policy. However, as time goes on, though till now no official document has ever been released to confirm the news, import of high-end clean flakes may become a reality.

Upon the news, market sentiment shows diverged.

1, Since the second half of 2017, PET flake supply kept tight, driving up its price and severely narrowing down the profits of recycled polyester plants. Once the import of clean flakes is again allowed, tightness may obviously be relieved. China recycled polyester plants then may feel more positive in procurement of feedstock, production and exporting and other market operations. They may also regain competitiveness in the international market.

2, For those invest overseas, however, this policy reverse, if true, will cause serious capital losses, especially for those who establish recycled PET granular plants oversea. They are to find that compared with imported clean flakes, their granular becomes less competitive. The same is true for recycled polyester plants set up overseas by Chinese ones considering import tariffs.

3, For virgin PSF market, things also turns less promising. The extra demand transferred from recycled PSF market due to its supply tightness, high price and tax issues will wither. Yet some virgin polyester plants given previous import ban have already planned to expand capacity. Should clean flakes import be allowed, they will have to reconsider how to expand new sales outlet.

On the whole, though it can’t say with absolute certainty that high-end clean flakes now are again be allowed to import since China Customs has not yet affirm the news by publishing any official document, all enterprises and investors are advised to stay cautious and keep a close eye on the import policy. After all, if really the import policy reverse, China and international virgin and recycled polyester industry will surely embrace another round of dramatic change.

As a reference, CCFGroup will hold 2018 PSF Industry Forum& the 6th Re-PET Forum on Jul 12-13, at which leaders from China Customs and the Ministry of Environmental Protection will deliver speeches to illustrate related policy changes and their influences. To better understand China import policy, you are welcomed to attend the meeting. About the conference, please refer to 2018 PSF Industry Forum& the 6th Re-PET Forum )
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