June 18, 2018

BGPET chip

بازار چیپس BGPET و تاثیر ان بر بازار پلی استر در چین

Since late May, polyester market turned into a weak note. The market was overtaken by supply/demand fundamentals, followed by cost.

in polyester market, producers kept record high operation. Since March, there were several new units starting up, (including Jiaxing Petrochemical’s 300kt/yr unit, Tongkun Hengbang’s 200kt/yr unit, Xinfengming’s 300kt/yr unit, Grerial’s 100kt/yr unit, Huaxicun’s 100kt/yr unit and Tongkun Hengteng’s 600kt/yr unit) and one old unit back on line (Hengyi Hengda’s 400kt/yr unit). Therefore, supply continued to increase. In early May, converters digested up some inventories stocked up in late April and early May. Downstream makers also maintained high operation. However, grey fabric prices had stopped marching higher for nearly one month after rising since lunar New Year’s Day. In the meantime, higher cost caused pressure. Despite decent cash flow margins, buyers were inactive to stock up with off season approaching. Under such background, polyester market headed south on poor supply/demand fundamentals.

BGPET chip presented an independent picture by virtue of different sales model. Since April, market presented favorable performances, with cash flow margins over 2,000 yuan/ton for a long time and once even reached 2,500 yuan/ton.

 Driven by high profit margins, it was sourced that several makers started up new units, restarted old units or switched to production of BGPET chip. In late May, Jiangyin-based Chengold started up and commissioned its 600kt/yr new unit. It took time to yield AA-grade products and it was heard that some sub-grade goods from new capacities flowed to the market. Furthermore, Liaoyang Petrochemical switched production of its 100kt/yr film grade PET chip to BGPET chip. Due to long-time offline, products were under test at current stage and is expected to be supplied to Northeast China. On the back of increased supply, small-sized bottle blowing and sheet plants adopted cautious attitude towards purchasing while some traders offloaded goods at low prices to take profits. As a result, market spot prices fluctuated downward.

With off season approaching, terminal demand turns weak. On the supply side, given favorable profit margins, polyester makers maintain stable operation and plans for startup of new units. Softening demand and increased supply may lead to climbing polyester fiber inventory and eroded cash flow margins.

BGPET chip market is in peak season. In addition, global supply remains tight. Even if Jiangyin-based Sanfangxiang’s 500kt/yr unit and Far Eastern Industries Vietnam’s 400kt/yr unit both start up as scheduled, newly added capacity is controllable. In busy season, BGPET chip makers are deemed to make high profit margins but market prices are possible to turn weak.

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