Performance of Fiber-grade PET Industry
Click:0    DateTime:Oct.27,2020

By Li Anchao, JLC

Stable growth of fiber-grade PET capacity

Textiles’ principal raw materials, fiber-grade PET can be mainly divided into civil yarn grade, industrial yarn grade and film grade. The fast-growing textile industry greatly propelled domestic capacity of fiber-grade PET, reaching around 6.83 million t/a at the end of August 2020.

   Boasting fiber-grade PET capacity of 3.48 million t/a, Zhejiang accounted for half of the nation’s total in 2020. Jiangsu came next, taking up 24% equivalent to 1.7 million t/a. Two new units increased combined capacity of Anhui and Hubei by around 320 kt/a.

Stable growth of fiber-grade PET output

   Domestic output of fiber-grade PET in 2019 was higher than in 2018, showing a MoM growth trend. However, the textile industry faced greater destocking pressure in H2 2019. While curbing downstream demand, this stopped fiber-grade PET plants from raising operating rates continually. With pressure of loss increasing, the plants reduced production further, hence a slight decrease in operating rates.
   In the first seven months of 2020, average operating rate of fiber-grade PET plants reached 81.29%. More specifically, many firms halting or reducing production during the Spring Festival decreased operating rates and output. In February and March, operating rates remained low and output plummeted given the coronavirus, international crude price plunge, weakening demand, many enterprises failing to resume production as scheduled, etc. Then the rates rebounded as the government stifled the coronavirus and sales of epidemic prevention products soared. Hence, the output rose until July and August, traditional off season of manufacturing industry. In addition, most firms in the two months halted or reduced production.

Shrinking foreign trade of fiber-grade PET in 2020

   Spread of the coronavirus in the world cut downstream demand for fiber-grade PET, and domestic supply was sufficient, making import volume decrease month by month. China imported 312.4 kt (skyrocketing 93.08% YoY) in 2018, 536.3 kt (soaring 71.67% YoY) in 2019 and 192.3 kt (down 31.01% YoY) during January-August 2020.
   Meanwhile, sharp decline of overseas demand dragged down export, reaching around 198.1 kt during January-August 2020, down 40.95% YoY, versus a growth of 32.67% YoY in 2018 (428 kt), and an increase of 25.14% YoY in 2019 (535.6 kt).

Downward trend of fiber-grade PET prices

   Closely related to prices of raw materials PTA and glycol, domestic fiber-grade PET prices showed a downward trend in 2019, hit the year’s highest of RMB8 150/t in July and reached the lowest of RMB5 850/t in November. Average price was down 16.88% YoY from RMB8 458/t in 2018 to RMB7 030/t in 2019.
   Compared with 2019, mainstream prices of fiber-grade PET were lower in 2020. In detail, the prices were relatively high at the beginning of 2020, fell slightly near the Spring Festival, and crashed in March due to the coronavirus. Then the prices rebounded, up by RMB300-500/t. Soaring sales of epidemic prevention products stimulated downstream demand. Some plants raised the prices by additional RMB100/t. Stronger cost support at the end of April helped the average price grow to RMB4 650/t in May. On August 31, the average price reached RMB5 008/t, down 32.31% YoY. The highest price was RMB6 450/t in January, and the lowest was RMB4 400/t in April. Prices in Q4 may be hard to grow because of many new units to be put into production and weak cost support.