Scan a QR Code
ET bottle chip supply & demand under a new tide of capacity expansion
¡ª¡ªMr. Charles Guo, Senior Analyst of CCFGroup
2017-10-19 17:14:21
Mr. Charles Guo, Senior Analyst of CCFGroup gave his speech of PET bottle chip supply & demand under a new tide of capacity expansion
The report is divided into four parts. In the first part, Mr. Guo briefly analyzed the characteristics of polyester feedstock market operation in 2017. 1. Less new capacities and more intensified industry; 2. High operating rate of polyester plants and demand for feedstock expanding greatly; 3. Intensive turnarounds tightened up supply further and destock period continues; 4. Profits gradually moved from upstream to the middle part.
The second part refers to PET bottle chip supply. According to CCFGroup data, China's PET bottle chip production totaled to around 5.4 million tons in Q1-Q3, 2017, up 9.9% year on year. China's PET bottle chip capacity is expected to grow by 1.65 million mt/yr in 2017, which included 250kta of old unit relocated by Shanghai Hengyi. Therefore, the actual increment was 1.4 million mt/yr. Plus the 300kta unit of China Resources Zhuhai started in Q4, 2016, bottle chip supply will theoretically increase by 850-950kt and annual production is assessed to 7.35-7.45 million tons.
The third part refers to demand. According to CCFGroup, China's PET bottle chip demand was around 3.8 million mt in the first three quarters of 2017, up 9% from the same period last year. PET bottle chip inventory fell apparently in Jan-Jul 2017, as demand growth surpassed supply growth. In Jun-Sep, China domestic PET bottle chip producers kept inventory around 10-15 days, and sometimes, were even in short of supply. According to CCFGroup, in Jan-Sep, particularly Jun-Sep, order in take of PET bottle chip for domestic sales and exports maintained more than one month. Sometimes delivery was even delayed due to supply tightness.
PET demand from soft drink in Jan-Sep, 2017 totaled 3.05 million tons, accounting for above 80%. In addition, demand growth from edible oil and sheet remained stable, about 9-11%.
As to outlook, Mr. Guo thought that new PET bottle chip capacity will start production intensively in Asia in three years. PET demand may keep growing steadily after fast recovery in recent years. China remains the most important production base and consuming market in Asia in the future. China¡¯s capacity expansion is predicted to reach over 3 million mt/yr in 2017-2019 and the total capacity may surpass 10 million mt/yr by 2020. Domestic demand increases in line with basis and may grow stably after recovery in recent years. Eyes are suggested to expansion in new fields. Competition in future market lies in allocation of market shares among industry tycoons.
As to price, price of spot water bottle chip in East China is assessed at around 6,500-8,500yuan/mt in 2017 (5,700-8,050yuan/mt in 2016). Price highs and lows this year are predicted to appear in the first half of 2017. The price is expected to improve to around 7,000-9,000yuan/mt and export price at around $920-1,180/mt FOB in 2018. However, PET bottle chip may move up at first and then turn weak later in 2018: it may slide to periodic low in Q4 2017 and rebound slightly after Spring Festival. The impacts of new capacity into production will enlarge. The price may decline and go stable amid intensive turnarounds.
Finally, he pointed out that Indorama continues merges and acquisitions overseas. China's enterprises form capacity groups. Industry tycoons are losing advantages. Anti-dumping and trade barriers will appear more frequently.
The report is divided into four parts. In the first part, Mr. Guo briefly analyzed the characteristics of polyester feedstock market operation in 2017. 1. Less new capacities and more intensified industry; 2. High operating rate of polyester plants and demand for feedstock expanding greatly; 3. Intensive turnarounds tightened up supply further and destock period continues; 4. Profits gradually moved from upstream to the middle part.
The second part refers to PET bottle chip supply. According to CCFGroup data, China's PET bottle chip production totaled to around 5.4 million tons in Q1-Q3, 2017, up 9.9% year on year. China's PET bottle chip capacity is expected to grow by 1.65 million mt/yr in 2017, which included 250kta of old unit relocated by Shanghai Hengyi. Therefore, the actual increment was 1.4 million mt/yr. Plus the 300kta unit of China Resources Zhuhai started in Q4, 2016, bottle chip supply will theoretically increase by 850-950kt and annual production is assessed to 7.35-7.45 million tons.
The third part refers to demand. According to CCFGroup, China's PET bottle chip demand was around 3.8 million mt in the first three quarters of 2017, up 9% from the same period last year. PET bottle chip inventory fell apparently in Jan-Jul 2017, as demand growth surpassed supply growth. In Jun-Sep, China domestic PET bottle chip producers kept inventory around 10-15 days, and sometimes, were even in short of supply. According to CCFGroup, in Jan-Sep, particularly Jun-Sep, order in take of PET bottle chip for domestic sales and exports maintained more than one month. Sometimes delivery was even delayed due to supply tightness.
PET demand from soft drink in Jan-Sep, 2017 totaled 3.05 million tons, accounting for above 80%. In addition, demand growth from edible oil and sheet remained stable, about 9-11%.
As to outlook, Mr. Guo thought that new PET bottle chip capacity will start production intensively in Asia in three years. PET demand may keep growing steadily after fast recovery in recent years. China remains the most important production base and consuming market in Asia in the future. China¡¯s capacity expansion is predicted to reach over 3 million mt/yr in 2017-2019 and the total capacity may surpass 10 million mt/yr by 2020. Domestic demand increases in line with basis and may grow stably after recovery in recent years. Eyes are suggested to expansion in new fields. Competition in future market lies in allocation of market shares among industry tycoons.
As to price, price of spot water bottle chip in East China is assessed at around 6,500-8,500yuan/mt in 2017 (5,700-8,050yuan/mt in 2016). Price highs and lows this year are predicted to appear in the first half of 2017. The price is expected to improve to around 7,000-9,000yuan/mt and export price at around $920-1,180/mt FOB in 2018. However, PET bottle chip may move up at first and then turn weak later in 2018: it may slide to periodic low in Q4 2017 and rebound slightly after Spring Festival. The impacts of new capacity into production will enlarge. The price may decline and go stable amid intensive turnarounds.
Finally, he pointed out that Indorama continues merges and acquisitions overseas. China's enterprises form capacity groups. Industry tycoons are losing advantages. Anti-dumping and trade barriers will appear more frequently.
