Asian polyethylene terephthalate production margins remain in positive territory despite a sharp fall in PET prices Wednesday, May 13, underpinned by seasonal demand peak and even sharper falls in feedstock prices, Platts data shows.
Benchmark FOB Northeast Asia PET fell $15/mt week on week from a seven-month high, to be assessed at $1,145/mt Wednesday.
PET's key feedstock monoethylene glycol and purified terephthalic acid prices meanwhile, fell $10-$42/mt over the same period.
CFR China PTA was assessed at $765/mt Wednesday, down $10/mt from the previous week, while CFR China MEG dived $42/mt week on week to be assessed at $983/mt Wednesday.
Based on Wednesday's assessments, the Asian PET production margin is at $2.88/mt, inching up from $2.18/mt a week ago, Platts calculations show.
Despite the downturn in PET prices this week, market sentiment in the Asian PET market would likely remain stable to firm, amid peak demand season for June and July, industry sources said.
Further support also came from low PET inventories in China, as domestic demand remains strong, they added.
"Chinese PET producers need to supply to the domestic market, which would likely reduce PET exports from China," an industry source said.
Asian PET margins started rebounding in the middle of April -- flipping to a positive of $10.78/mt on April 19 -- as peak PET demand season for drinking bottles pushed Asian PET prices higher.
This was a sharp uptick from minus $51.70/mt on April 12 -- lowest level since August 17, 2014, when the margin was calculated at minus $69.82/mt -- as margins slipped in tandem with bullish feedstock prices.
Asian PET production margin is calculated by the following formula: the FOB Northeast Asia PET price minus CFR China PTA price multiplied by a conversion factor of 0.86 minus CFR China MEG price multiplied by a conversion factor of 0.34 minus $150/mt of conversion cost.
