CMAI '05: Cotton market won't impact polyester prices

01 April 2005 00:19  [Source: ICIS news]

HOUSTON (CNI)--The worldwide cotton market will not fundamentally change strong polyester demand, a Chemical Market Associates Incorporated (CMAI) consultant said Thursday.

 

Speaking at the CMAI 2005 World Petrochemical Conference, Ian Julian said polyester will continue to have strong growth over the next 12 months in conjunction with a strong economy.

 

Fibre margins will remain low as the world will continue to be oversupplied with polyester fibre in the foreseeable future but polyester intermediates are near the peak of their cycle and strong polyester fibre demand will continue to allow for strong margins among polyester intermediates.

 

Julian said interest in the cotton market has drawn much interest as a result of a record 2004 cotton crop that was 22% above the 2003 crop. Cotton prices dropped to a 25 year low relative to polymer fibre, causing polyester fibre and intermediate producers to worry about their margins.

 

However, the high growth rate of polyester fibre gives it a large amount of market momentum, which tends to dampen fluctuations of cotton production.

 

Currently there is a global oversupply of polyester fibre while polyester chemical intermediates remain in tight supply, Julian said. As a result, he said, there is no margin that polyester fibre producers can yield.

 

With tight supply demand in polyester intermediates and growth rates of nearly 7%/year, polyester intermediates suppliers can pass along every price increase from crude oil without lowering their margin, he said.

By: Brian Ford
+1 713 525 2653

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