09 November 2010 04:57 [Source: ICIS news]
By Becky Zhang
Domestic PTA prices jumped by CNY2,050-2,400/tonne ($308-360/tonne) or 25.9% week on week to CNY10,600-11,000/tonne ex-warehouse, taking the cue from the futures market, according to ICIS.
China PTA futures trading on the Zhejiang Commodity Exchange (ZCE) was suspended for the whole day Tuesday, after values soared by more than 10% in just three days.
Regional PTA values followed the lead of
The downstream 1.4 denier grade polyester short staple fibre (PSF) prices in the domestic Chinese market also shot up 39.3% week on week to CNY18,000-18,500/tonne delivered (
There’s a concern, however, that prices would come crashing down after a sharp increase.
“One must take the cautious road once demand from end-markets winds down as a resistance to hefty prices,” said Kuang Bo, analyst at Yangan Future Broker.
“Waning demand would build up inventory and finally bring down prices and margins of the whole industry,” she said.
A Chinese PTA producer described the recent price spike “irrationally strong”.
But it looks like the upward momentum would continue for some time, with PTA end-buyers such as polyester makers and textile producers scrambling for available cargoes in the spot market, said a trader.
Taking out the element of speculation, there was actual demand supporting the firm PTA prices, they said.
“We will buy [PTA] because we make money, and that we could hardly meet all the demand from our customer,” said a Zhejiang-based polyester maker, which had to stop selling material for two days due to insufficient supply.
PSF makers were raking in profit margins of as high as CNY4,900/tonne, up a hefty 135% than last week, based on ICIS data.
The margins took into account feedstock prices of CNY10,800/tonne ex-warehouse for PTA and CNY9,000/tonne ex-tank for MEG.
“But few of us could make such an amazing margin because most of us had over-committed our supplies to customers in the past few weeks due to brisk demand and good profits,” said a major Jiangsu-based PSF producer.
A number of PSF makers had started to hold back on offers this month amid the rapid uptrend in prices, market sources said.
($1 = €0.72 ; $1 = CNY6.66)
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