Insight Focus
- PTA producer margins remained weak last week on subdued demand due to COVID controls.
- PET resin export prices tracked feedstock costs higher, face prospect of weaker demand.
- The raw material forward curve remains flat, slightly backwardated over the next 12 months.
PTA Futures and Forward Curve
- PTA futures closed higher on the week, tracking feedstock costs.
- However, weaker downstream demand resulting from COVID controls has lengthened supply in April and narrowed the PTA-PX premium.
- Polyester operating rates may show signs of increasing as logistics disruptions begins to ease, but operating rates for packaging and fibre in many parts of the country are still low.
- The PTA 12-month forward curve remains backwardated, with future months trading at a discount to the current May contract.
MEG Futures and Forward Curve
- MEG futures moved up last week, driven by the rebound in crude oil prices.
- Market sentiment remains cautious as high port inventory and weak polyester demand persist.
- The MEG forward curve remains in contango with future contracts, trading at a premium to current levels.
PET Resin Export – Raw Material Spread and Forward Curve
- With China’s PET resin export prices closing the week at 1,215 USD/tonne, the current physical differential to feedstock futures widened by around 16 USD/tonne to 141 USD/tonne.
- The PET export-raw material forward curve remains flat, slightly backwardated over the next 12 months.
Concluding Thoughts
- Whilst PET resin operating rates show signs of rising, consumer demand for beverage and apparel remains weak due to COVID restrictions in Shanghai and other parts of China.
- Weaker domestic demand and additional PET capacity coming on-stream in Q2 should raise supply.
- Chinese PET producers also face the prospect of weaker export demand, which is likely to place greater pressure on domestic sales in the coming months.
- Despite huge export orders in hand, March PET resin export statistics fell short of expectations.
- Exporters must now navigate bottlenecks and congestion to meet schedules.
For PET hedging enquiries, please contact the risk management desk at MKirby@czarnikow.com.
For research and analysis questions, please get in touch with GLamb@czarnikow.com.
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Explainers That May Be of Interest…
