30 August 1999 00:00 [Source: ACN]
MARGINS for Asian polyester producers are fast disappearing as prices are either falling or staying stagnant amid escalating feedstock costs.
A Taiwanese producer told ACN that current polyester staple fibre (PSF) prices translated into negative margins for Taiwanese producers.
The average operating rate in Taiwan for PSF is now around 95% and that for polyester filament is 70-80%, he said. Operating rates were 100% in Q2.
The producer said he was selling PSF shipments for August at around 75 cent/kg fob Taiwan - 2 cent/kg lower than July prices. Domestic prices for PSF in Taiwan have slipped from NT$30/kg in Q2 to NT$28-29/kg in Q3, he said.
The weakening prices in Q3 - the traditional lull season - contrasted with an escalation in feedstock prices. Paraxylene prices have rocketed by US$100/tonne since early July, prompting purified terephthalic acid producers to raise selling ideas to as high as US$480/tonne cfr Taiwan.
A South Korean polyester producer also lamented that he was unable to pass on raw material costs to Chinese buyers.
South Korean producers and Chinese buyers were in a price deadlock for August shipments of PSF, he said.
The producer said his attempt to raise PSF prices by 1 cent/kg to 76 cent/kg fob Korea for August shipments to China met with very strong resistance. The offer price translated into 81 cent/kg cfr China with 90 days' credit, he said. But Chinese buyers' ideas were only 79 cent/kg cfr China, he said.
Producers also expressed concerns over the impact of a new Chinese government ruling which strips blacklisted importers of exemptions from value-added and import taxes. These taxes amount to more than 40% of polyester fibre prices, said the Taiwanese producer. The regulation is to be implemented in October (ACN 12 July, p5).
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