26 April 2011 06:59 [Source: ICIS news]
Correction: In the ICIS story headlined "Asia PTA falls $100/t on panic selling, outlook bearish" dated 26 April 2011, please read in the fifth paragraph from the bottom ... 20,000-30,000 tonnes ... instead of 20,000-3,000 tonnes .... A corrected story follows.
By Becky Zhang
Deals were heard concluded at $1,290-1,300/tonne CFR China Main Port (CMP) on Tuesday morning, $100/tonne lower than the levels seen on 19 April, according to ICIS.
“The downtrend is too rapid, we never expected that!” said a major end-user.
A number of traders and end-users said they were caught off-guard by the rapid fall of spot prices and had no idea why prices dropped so fast in the past week.
“Some traders were initially offering prompt arrival cargoes and cargoes that had already arrived at lower prices, but [those] were met with weak buying interest,” a trader said.
An increase in spot supply following the restarts at major Asian PTA plants and the waning demand in the
Weaker PTA futures traded on the Zhengzhou Commodity Exchange (CZCE) further weighed on market sentiment, he added.
PTA futures have been on a downtrend since early March and fell by yuan (CNY) 1,646/tonne ($252/tonne), or 14%, to CNY10,286/tonne on Monday’s close, according to the CZCE.
The downturn in PTA spot prices has accelerated since last Friday, even a rebound in PTA futures late last week failed to boost sentiment, market sources said.
First-tier traders were proactively offloading cargoes because of the downbeat outlook for the coming month.
“We have a bearish outlook for the rest of April and May. We have to re-adjust our sales strategy during the downturn to reduce our losses,” a major regional trader said.
The trader was heard to have sold the majority of its May cargoes, but was buying at the same time at lower prices to plug its shortage for contract commitments.
This was considered as an effective way to minimise losses, according to several other major first-tier traders.
Both end-users and second-tier traders were actively buying when prices fell all the way through, market source said.
“We’re buying along the downturn to slowly build up our inventory. The move won’t have substantial risks to us as we are consumers,” said a polyester maker.
Some second-tier traders were also heard to have booked cargoes this week as they believe the fall in spot prices was too drastic.
Some South Korean and Taiwanese producers were heard to have diverted a total of 20,000-30,000 tonnes of spot cargoes to
Meanwhile, the rapid price falls have narrowed the gap between spot prices and domestic Chinese prices, market sources said.
Discussions for Chinese domestic material were at CNY14,500-15,000/tonne EXWH, which are equivalent to $1,284-1,290/tonne.
“The normal price gap should be around $20/tonne,” a trader said.
This means either a drop in Chinese domestic prices or a rebound in US dollar spot prices in the coming days, he added.
($1 = CNY6.53)
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