PTA, polyester market balance in China key to restoring confidence

Price stability and an equilibrium between supply and demand are key to restore confidence in the Chinese purified terephthalic acid (PTA) and polyester industry, as per market participants in Platts. Since the beginning of the fourth quarter, PTA and polyester makers have been under severe cost pressure, due to high feedstock prices and low demand. PTA makers such as Yisheng Petrochemicals, Shaoxing Yuandong and Xianglu Petrochemicals have already reduced operation rates from more than 100% to around 80% in November. And more cuts could be expected in December if production margins erode further. The fiber intermediate producers said they are being squeezed by high paraxylene feedstock prices and low demand for PTA as polyester makers cut rates. "Cutting run rates is a way for us to reduce our losses," said a source from Xianglu Petrochemicals, which has a 1.5 mln tpa PTA plant in Xiamen, Fujian province. November PX Asia Contract Price settled at US$1500/mt CFR: this means that PTA makers need to break even at US$1140/mt but the average PTA spot price between November 1 and 23 is only US$1078.38/mt CFR China. Polyester makers have also cut their production rates since October. They applauded the PTA makers' move to reduce output and said it could be a way to force PX prices lower. PX is the only commodity in the polyester chain which is currently profitable. The average PX-naphtha spread from November 1-23 is $546.91/mt -- more than double the $230/mt needed to break even. PX prices should be rectified to a level which is acceptable to the polyester chain. However, PTA makers cutting their output will put downward pressure on PX. Poor export demand from the West was cited the main factor for polyester makers to cut rates. The polyester inventory level is around 20 days. Foreign buyers have no confidence, but domestic demand remains strong. Both PTA and polyester makers needed to reduce their operating rates in tandem to balance the market.
  More News  Post Your Comment
{{comment.Name}} made a post.




There are no comments to display. Be the first one to comment!


Name Required.


Email Id Required.

Email Id Not Valid.


Mobile Required.

Email ID and Mobile Number are kept private and will not be shown publicly.

Message Required.

Click to Change image  Refresh Captcha