14 November 2007 04:21 [Source: ICIS news]
By Hong Chou Hui
SINGAPORE (ICIS news)--Polyester fibre and yarn in northeast Asia are expected to chalk up more gains due to surging feedstock monoethylene glycol (MEG) values and peak winter demand for consumer goods, producers and traders said on Wednesday.
Prices are already up about 6% in November and are expected to continue rising until the year-end.
“The purchase of consumer goods for personal use and as gifts for the year-end festivities has always been one of the main drivers of demand around this time of the year,” a producer from Taiwanese polyester maker, Chung Shing, said in Mandarin.
“We expect this peak season to taper off latest by the middle of December,” he added.
Drawn texturised yarn (DTY) 150 prices increased by 10 cents (€0.07) per kg to $1.84-1.88/kg cost and freight (CFR) China for the week to 13 November compared to last week’s level of $1.74-1.80/kg, based on global chemical markets intelligence service ICIS pricing.
“We saw our prices firm after the Canton Trade Fair at end-October. The downstream garments sector is entering peak production to ensure their goods reach consumers in time for the winter season and year-end festivities,” an executive from Chinese polyester maker, Xiamen Xianglu Chemical Fibre, said.
He added that with the cost of MEG surging for the third consecutive month, prices have to be increased if polyester producers were to remain financially viable.
The Canton Trade Fair, which takes place twice a year, is an important barometer of export orders from ?xml:namespace>
The October event saw a 6% increase in export orders for Chinese fibres and yarns from the previous fair in May.
Polyester fibres and yarn producers were concerned that they could be staring at a further hike in their production costs.
“We’ve crunched our feedstock costs and are considering raising offers by $0.05/kg for the month of December,” a Taiwanese trader of polyester fibres and yarns said.
“We do not want to keep raising our prices because it may scare buyers off but if we don’t, we may face elimination from the market,” he added in Mandarin.
Spot prices of MEG could soon soar beyond the $1,800/tonne CFR China mark in a few weeks’ time.
MEGlobal, Shell and SABIC recently raised its December Asian Contract Price (ACP) for MEG by $190-200 to $1,590/tonne due to tight global supply and strong market demand by a company official.
In the past three months, margins for upstream polyethylene terephthalate (PET) producers had improved due to soft feedstock purified terephthalic acid (PTA) prices, but the recent upward trend in crude oil prices hitting an all-time high of $98/bbl last week triggered a parallel firming in PTA.
Prices of PTA’s feedstock PX rose above the $1,100/tonne CFR Taiwan mark last week, resulting in several Chinese PTA majors such as Xiang Lu Petrochemical declaring shutdowns to maintain margins in light of stagnant PTA prices.
Polyester fibres are used as filling for comforters and winter jackets while polyester yarns are utilised to make clothes.
Major producers of polyester fibres and yarns include
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