Margins gone for polyester producers as costs escalate

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).

For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.

Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.

Printer Friendly