China PTA futures fall 3.2% following a plunge in cotton prices

05 May 2011 05:55  [Source: ICIS news]

SINGAPORE (ICIS)--Purified terephthalic acid (PTA) futures on the Zhengzhou Commodity Exchange (CZCE) fell 3.2% on Thursday morning following a 5.2% plunge in cotton futures on the same platform, brokers said.

PTA futures have been tracing cotton futures due to their similar application in the textile industry, the brokers added.

The most actively traded September PTA futures contracts were priced at yuan (CNY) 9,890/tonne ($1,524/tonne), 3.2% or CNY328/tonne lower from Wednesday’s settlement price of CNY10,144/tonne.

Meanwhile, September cotton futures contracts tumbled by 5.2% or CNY1,365/tonne from Wednesday’s settlement to CNY24,820/tonne on Thursday morning, according to CZCE data.

Such large plunge was last seen on 1 April when PTA futures dropped 3.6% during the day, four days before China raised interest rates by another 25 basic points, market sources said.

“Investors are taking “sell” positions on the futures market to lock in their profits because they are worried that the Government may impose further tightening monetary policies soon,” said a PTA analyst with China’s Yongan Futures.

Weaker PTA futures weighed heavily on the spot market, traders said.

Buying indications for Taiwan-origin PTA declined to $1,300/tonne CFR China Main Port (CMP) on Thursday morning, $25-30/tonne lower from Wednesday, according to ICIS.

($1 = CNY6.49)

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By: Becky Zhang
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