PET feedstock costs at mid-month were mostly in line with the early October levels. However, last week, upstream markets recorded noticeable drops when compared to the previous week. The price for purified terephthalic acid (PTA) is approaching year-low levels. Prices for another feedstock, paraxylene (PX), reaching the lowest levels seen since over three months, according to ChemOrbis, as demand has dropped. Spot PX prices shed $150/ton on FOB Korea basis while spot PTA and MEG prices lost $140/ton and $110/ton, respectively, on a week over week basis on CFR China basis.
Tightening credit lending, a result of the Chinese government's attempts at taming inflation, also is supporting the current negative outlook in the upstream markets.
In China, local PET suppliers' prices fell CNY300-500/ton ($47-78/ton) when compared to the previous week. Chinese PET processors are reducing their operating rates as the summer high season passes.
According to ChemOrbis, little change is expected, with PET prices likely to stay down as the lower upstream costs are not yet reflected in current PET prices. Based on the spot MEG and PTA prices, a theoretical PET production cost, without producers' margins, comes to $90-155/ton lower than the current offer levels in the market on an FOB China basis.