FocusAsia polyester fibres' gain may halt

27 June 2007 06:08  [Source: ICIS news]

By Hong Chou Hui

SINGAPORE (ICIS news)--Polyester fibre and yarn prices were up by about 8% this week on the back of strong demand from downstream fabric manufacturers but further gains were uncertain, producers and traders said on Tuesday.

Drawn texturised yarn (DTY) 300 prices increased by 13 cents per kg free on board (FOB) northeast (NE) Asia for the week to 26 June from last week’s level of $1.53-1.57/kg, based on global chemical markets intelligence service ICIS pricing.

“Domestic demand for DTY in May and June was strong in Taiwan with the domestic sector consuming 70% of all DTY produced,” said a Taiwanese producer in Mandarin.

Producers of filament yarn in China said that demand outstripped supply leading to limited availability. They pegged the sales to output ratio at 120% early last week, which subsequently dropped to 80%.

In China, domestic prices for POY rose by yuan (CNY) 100 ($0.13). A Chinese producer concluded a deal at $1.70/kg FOB for a few hundred tonnes of DTY.

In Taiwan, deals for 8,000 tonnes of partially oriented yarn (POY) and for 2000 tonnes of DTY 150 were concluded at $1.50/kg and $1.75/kg respectively.

Fibre makers across the region enjoyed a slight rebound to 80% in sales to output ratio this week, an increase of 10% from a week back.

In Taiwan, this increase was attributed to strong domestic market demand from downstream consumers who kept production lines open despite the end of peak summer production season.

With the current lull season expected to last until mid-July, a polyester producer said that some consumers might take advantage of the current low prices to secure pre-orders to prepare for the production of winter clothing from August.

Fabric transaction volumes at the benchmark China Textile City in Shaoxing was recorded at 8-9m metres per day, an increase of 1-2 million metres from the previous week’s trading level.

But last week’s sudden upturn in prices also made some sellers cautious and they warned that this could be a flash in the pan. They added that the sudden change in trend led some buyers to enter the market and replenish dwindling inventories.

“We are waiting for purified terephthalic acid (PTA) costs to go below the $900/tonne CFR (cost and freight) China level before buying,” a trader from southeast Asia said. This could have a ripple effect on polyester producers who could be forced to dump inventories.

($1 = CNY7.62)

By: Hong Chou Hui
+65 6780 4359

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