China's Recycled-PFY Market In A Dilemma

Market News

China's Recycled-PFY Market In A Dilemma

Ever since virgin PFY price slumped in early March, recycled PFY price tracked the fall and the price spread between the two greatly fell from the highest level of 1200 yuan/mt in February to the lowest of 200 yuan/mt. In March, the spread hovered around at 300-600 yuan/mt, down 200-300 yuan/mt year on year. In recent days, the gap between the two remained low, restraining re-PFY market.

The price of recycled bottle flake, its feedstock, also exerted an impact on re-PFY market. Obvious decline of supply due to sustained environmental regulation made re-PET price much higher than that in the same period of 2016 despite a seasonal decrease in March and have remained firm since late April. Thus in recent three months, re-PFY cash flow was basically pegged around the breakeven line.

With the improving quality of recycled bottle flake, the price of re-PET for re-PFY basically drew even with that for HC re-PSF, yet the price of the latter kept higher than the former for a long time. What's more, the overall production cost of HC re-PSF was 200-300 yuan/mt lower than re-PFY. And though feedstock from suppliers could produce re-PFY and HC re-PSF as well, stronger procurement capability of HC re-PSF plants means that in case of feedstock shortage, re-PFY plants would be mired into a dilemma when HC re-PSF plants raise the purchasing price, which is exactly the case of re-PFY market.

Thus in a time when virgin PFY shows hard to surge on sustained low crude oil, while feedstock keeps firm amid supply shortage, re-PFY market may be hard to enjoy a satisfactory hike in a long time.