UpdateChina PTA futures extend falls, 5% slump halts trade

12 November 2010 03:44  [Source: ICIS news]

(adds market comments in paragraphs 5-8)

SINGAPORE (ICIS)--China’s purified terephthalic acid (PTA) futures halted trading on Friday morning as prices plunged by 5.01% to yuan (CNY) 10,576/tonne ($1,598/tonne) because of bearish sentiment, market sources said.

PTA futures were extending their falls from Thursday, after surging by 20% over four trading days on the Zhejiang Commodity Exchange. No trades were done on Tuesday following sharp price spikes in previous sessions.

Market players became cautious when the Chinese central bank announced late on Wednesday that it would raise bank reserves on 16 November to siphon off liquidity from markets.

Spot PTA prices tracked the declines in future markets, with selling indications down by $50/tonne from Thursday at around $1,250-1,270/tonne CFR (cost & freight) CMP (China Main Port), while buying ideas were at $1,200/tonne CFR CMP, market sources said.

“It is within our expectation as sharp falls always come right after massive jumps,” said a Chinese trader.

Market players were divided on the future trend in prices, with some saying values would continue to decline for days, possibly wiping out the recent sharp gains.

However, others said that the continued depreciation of the US dollar would continue to support PTA prices going forward.

Meanwhile, polyester makers in China – the major buyers of PTA – were facing inventory pressure as sales slackened in the middle of the week, market sources said, adding the daily sales to output ratio was at 30-50% on Wednesday and Thursday.

“We are having an urgent meeting now to discuss coping strategies in the volatile market,” said a major polyester maker.

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By: Becky Zhang
+65 6780 4359

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