02 January 2009 02:56 [Source: ICIS news]
By Salmon Aidan Lee
“Traders need that uncertain factor, to be frank, if not we may not survive at all,” said a veteran trader with Summit International, based in
With fewer price fluctuations and increased predictability, the opportunities for traders to take positions, whether long, short and otherwise, would be drastically reduced, sources said.
“It’s funny, I cannot see traders coming to me and sell their [spot] PX. Now, I just go straight to producers and get my [spot] PX,” said a source from Oriental Petrochemical (
Ten consecutive working days of not witnessing trade activity on a open-market trading platform, which is operated by a leading price reporting service, is not uncommon. This could signal that liquidity in the Asian PX market was indeed shrinking, traders and brokers lamented.
“It’s terrible, if I make one or two deals a month, it’s considered normal,” said a broker with Singapore-based firm.
This problem of liquidity, or the lack of it, could mean that PX in 2009 would experience sluggish price movements, said buyers and sellers.
“Now, you see demand strong and the spot availability is actually so tight, and yet prices are slowly climbing up towards $700-750/tonne (€504-540/tonne) [from $580-600] only over more than two months,” said a source from Yisheng Petrochemical, a Chinese PTA producer.
The demand-supply situation is expected to remain evenly balanced, even as more PTA plants start-up in 2009. The amount of PX added could be roughly the same, said market observers.
By the middle of next year, three new PTA lines could start-up in
Although the new PX facilities starting up in the first half of next year would be limited to five units, PX supply could more than enough to feed the new PTA capacities starting up, some buyers said.
And by the end of 2009, at least one more supplier is expected to come on-stream, and that could alleviate the fundamental tightness seen in the PX market seen since 2006.
On the other hand, other players held a bullish view on the markets, expecting prices to hold firm in 2009 due to supply tightness.
“It’s still going to be quite tight in most of 2009 for PX supply, so we should not assume that can get the PX very easily,” said a trader with Japan’s Itochu Corp.
Yet, the tight supply might not mean very high or even volatile pricing, said market participants who were less bullish.
“Crude oil is expected to be keep low next year, and the rest of aromatics should not do very well either, it’s [tough] to assume PX would keep rising,” said a Singapore-based trader with a European firm.
“Now, PX prices are rising because PTA producers can make margins and are trying to increase operating rates to full; imagine once PX rise too much and PTA margins are gone, PX buyers would not want to pay high prices again,” said an official from Xiang Lu Petrochemical, a Chinese PTA producer.
“While we’re cautiously optimistic the worst is over, we also need to see the see the downstream situation, and see whether the whole polyester chain is healthy to provide for higher PX prices,” said a Korean trader based in Shanghai, who was a procurement agent for Hualian Sunshine Petrochemical, another Chinese PTA maker.
Barring any crashes in the downstream PTA, polyester and textile sectors, PX traders saw stability ahead for 2009.
As participation in the spot trade is expected to be low, and most would rather err on the side of caution amid the global economic meltdown. 2009 could turn out to be a year of lost opportunities, some traders said.
($1 = €0.72)
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