13 December 1999 00:00 [Source: ACN]
Purified terephthalic acid (PTA) markets were in disarray because Chinese buying ideas have fallen below US$500/tonne cfr China. Sellers said they have not concluded any recent business as price ideas were falling too rapidly.
'There is total confusion in Chinese markets', said one producer. Chinese buyers were giving no firm bids and price ideas varied widely across the market. Chinese PTA markets started weakening in mid-November (ACN 29 Nov, p23). Traders said the situation has worsened as a domestic producer lowered its December price by Rmb300 (US$36.20)/tonne. One trader claimed actual deals were being done at much lower levels.
A Taiwanese producer maintained its price ideas at US$510/tonne fob Taiwan and said it would make no business sense to export below this level. But South Korean producers were facing rising inventory levels and were under pressure to maximise sales ahead of the financial year-end in December. Despite the poor market sentiment, DuPont Far Eastern Petrochemicals has announced a US$30/tonne increase in January PTA prices. The domestic price in Taiwan has been set at US$590/tonne delivered while the export price is at US$610/tonne cfr Asia mainport.
Company sources pointed out that operating costs were on the rise as utility costs have increased and paraxylene price nominations for Q1 2000 were higher than Q4. Export availability from DuPont is likely to be limited as the company plans to build up inventory ahead of a 20-day scheduled turnaround at a 450 000 tonne/year plant in February.
Some traders felt that given the current market situation, DuPont's announced January price is unlikely to be achieved.
They pointed out that Chinese demand will probably be weak until after the Lunar New Year Holidays in early February.
However, inventory levels with most Chinese buyers are low and this could prompt an earlier-than-expected return, said one trader.
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