China polyester prices up on demand, feed costs

03 April 2007 07:33  [Source: ICIS news]

SINGAPORE (ICIS news)--Chinese domestic polyester prices have surged by yuan (CNY) 300-500/tonne ($39-$65/tonne) since Thursday on rising feedstock costs and booming demand from the downstream textile sector, market sources said on Tuesday.

News that the paraxylene (PX) Asian contract price (ACP) for April was settled at a much higher-than-expected level of $1,100/tonne CFR (cost & freight) Asia, pushed feedstock purified terephthalic acid (PTA) prices to $875/tonne CFR CMP (China Main Port).

This was exacerbated by soaring PX spot prices towards $1,180-1,200/tonne CFR Taiwan/China.

Aside from higher feedstock costs, favourable downstream market conditions also boosted monoethylene glycol (MEG) spot prices to $885/tonne CFR CMP amid robust demand.

Chinese polyester production and sales turnover transactions have also jumped as producers could hardly cope with the sudden burst in demand.

Some producers reportedly withheld offers in the face of soaring prices, causing supply to tighten even further.

Operating rates were ramped up to as high as 90-100%, while sales turnover for polyester yarns in domestic China ballooned to 100-150%.

Improved demand boosted sales against daily output rates to 200-300% for many grades of yarns, with many producers selling more than they could manufacture.

The sudden upturn in the Chinese domestic markets were mainly caused by rising April feedstock costs, renewed export demand from downstream and improved market sentiment, market sources said.

However, it was still too early to tell if current strong prices were sustainable, they added.

($1 = CNY7.73)

By: Yao Wang
+65 6780 4359

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