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Insight | Time:Jul 3 2018 2:37PM
PET bottle chip supply demand pattern change in H1 2018
 
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Till end Jun, China PET resin capacity totaled 8.36 million tons, excluding Sanfangxiang 500kt/year and Chengxing 600kt/year lines as they haven’t achieved steady run.

Output:
PET resin output amounted to 4 million tons in the first half of 2018, growing 14.5% y-o-y. Domestic O/R maintained at high position as exports expanded substantially. Apart from Lunar New Year holiday impact, when monthly production shrank modestly, output generally averaged at 600-700kt in other months. May registered the production peak, bolstered by new capacity launch and seasonal delivery. In Jun, PET resin monthly output edged lower due to environmental protection inspection or annual turnaround plans though O/R still maintained high.

In the second half year, with new plants starting up, Q3 incremental supply is assessed at 3500mt/day. Concerning any delay of launch or plant maintenance, the figure may get discounted.

Demand growth:
According to CCFGroup statistics, China PET bottle chip consumption added up to 3.25 million tons in Jan-May, including 2.08 million tons for domestic use and 1.17 million tons for export, respectively growing 6% and 41% on annual basis. Jun consumption is expected to reach 740kt. This way, H1 2018 total consumption may get to 4 million tons, largely in balance with output. Comprehensively calculating, PET bottle chip stock level may stay the same as early 2018 level, primarily on account of remarkable exports growth.

Soft drink side: China soft drink demand for PET resin may reach 250kt throughout 2018, taking up about 80% of domestic sales. Seen from H1 2018 performance, this figure is easy to manage, and given no large scale shutdown later on, it’s likely to see 300kt increase. Since supply may increase a lot later on, to maintain balanced supply and demand, monthly exports shall at least be above 200kt, otherwise, stock level will pile up. 200kt is acceptable, based on Jan-May figure, but still depends on order intake in H2 2018.

Overseas market:
A spate of units in overseas market plan to commence or restart in 2018. Near term ones include Lithuania based 160kt, Vietnam based 400kt and U.S. based 360kt M&G lines. China exports boom in H1 2018 is mainly supported by unexpected shutdown in overseas market, plus PTA unit turnaround due to acetic acid shortage, which indirectly impacted PET bottle chip production. Overseas supply is expected to recover soon as these plants gradually restart in the second half of 2018.

Part of PET bottle chip plant operation in and abroad
Category Country Producer Capacity (KT) Closed Startup
maintenance China Dragon Special Resin 250 late Jun mid Jul
new China Sanfangxiang 500   end Jun
new Vietnam Far Eastern 400   Jul
new Lithuania Neo 160   end Jun
restarted China Chengxing 600 early June end Jun
restarted United States (US) M&G 360 Oct-17 Jul
restarted Belgium JBF 400 May mid Jun
restarted Oman OCTAL 500 end May end Jun
restarted Egypt EIPET 540   Jul
shift production China Far Eastern 150 early June end Jun
output cut Spain Novapet 250 May Jun

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