12 January 2010 06:33 [Source: ICIS news]
By Bohan Loh and Becky Zhang
SINGAPORE (ICIS news)--Asian paraxylene (PX) spot prices are poised to remain firm through the first quarter of 2010 on reduced operating rates coupled with a series of scheduled and unscheduled maintenances at regional plants, market players said on Tuesday.
PX was assessed at $1,145-1,155/tonne (€790-797/tonne) CFR (cost and freight) ?xml:namespace>
“Looking at the overall supply and demand situation, PX looks good through February at least,” said a source from Taiwanese purified terephathalic acid (PTA) producer, Formosa Chemical and Fibres Corp (FCFC).
The source was referring to a heavy maintenance schedule coupled with reduced operating rates of Japanese PX producers. (refer to table below for reduced operating rates at other PX makers)
Idemitsu Kosan would operate both its Chiba and Tokuyama-based facilities, which can jointly produce up to 480,000 tonnes/year of PX, at 80-90% of nameplate capacity through February due to lack of feedstock naphtha.
Japan Energy shut down its 400,000 tonne/year Chita-based PX plant on 7 January for a 45-day maintenance. The company’s other two Kashima-based facilities were also scheduled to undergo a 50-day maintenance from mid-April.
The company estimated a resulting production loss of 30,000 tonnes of PX and expected to restart the facility in phases from 16 January.
“We will try to fulfil our requirements on the spot market,” said a source from a major PTA maker based in south
The outage at the plant had coincided with a pre-Chinese New Year buying frenzy among Chinese PTA makers when players build up inventory levels ahead of the week-long holidays.
“We are looking to purchase more materials either this week or next,” said a source from China East Hope, a PTA maker based in
Firmer PX prices had pushed PTA up by $15/tonne to $940-950/tonne CFR China by the close of business on Monday.
As such, PTA producers could still maintain a profit margin of $20-40/tonne, assuming additional production costs other than raw materials would average around $150/tonne, some traders said.
This had induced PTA producers in
Despite the rosy outlook in both the regional PX and PTA markets, concerns were raised among players in the downstream polyester sector as poor margins and rising inventory pressures had recently sparked a worrying trend of shutdowns to minimise losses, said traders.
Transaction volumes at the Zhejiang Textile City in eastern China continued to shrink from the 6.47m meters/day in early December to around 5.55m meters/day last week, reflecting the softness in the garment industry.
Although $100-200/tonne or 1-2% gains were achieved for polyester short staple fibre and filament for the week ended 5 January, it was still hard for the polyester makers to pass on the 5.4% hike in feedstock prices including PTA and another major raw material mono ethylene glycol (MEG).
In addition, shutdowns for a total of 790,000 tonnes/year PET bottle grade and 600,000 tonnes/year polyester filament capacities have already been planned beginning mid-January through February in China due to soft demand and also the Chinese Lunar New Year holiday.
Source: ICIS pricing
($1 = €0.69)
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