12 May 2011 15:19 [Source: ICIS news]
SINGAPORE (ICIS)--Asia purified terephthalic acid (PTA) prices dived by $50-55/tonne on Thursday amid bearish sentiment on the back of plunges in PTA and cotton futures traded on the Zhengzhou Commodity Exchange (CZCE), market sources said on Thursday.
PTA futures have tracked closely the trend in cotton futures since late March. PTA is the primary feedstock for polyester fibre and yarns which are used in textile manufacturing.
Three deals were heard concluded at $1,200/tonne CFR China Main Port (CMP) on Thursday afternoon, a sharp fall of $50-55/tonne from Wednesday. Asia PTA prices have fallen since late March by a total of $315-320/tonne or 21%, according to ICIS.
Buying indications dived to $1,200/tonne CFR CMP early in the morning, but deals were subsequently heard at the same level, market sources said.
“Some traders were in a rush to sell cargoes because of their bearish outlooks,” a Zhejiang-based end-user said.
Continuous falls in PTA and cotton futures, slower-than-expected polyester demand and an expected PTA capacity expansion in July-September, coupled with China’s persistent efforts to tame inflation had led to traders’ bearishness, the end-user said.
Traders’ panic selling further sidelined potential buyers, especially end-users.
“We are only watching the market and refrained from buying any cargoes because the downtrend is too fast,” another Zhejiang-based polyester maker said.
“Sharp falls in equity markets could be a sign for impending tightening policy,” a local trader added.
Late in the day, China hiked bank reserve requirements by another 50 basis points to 21% from 18 May, the fifth time in 2011, according to the People’s Bank of China (PBC).
($1 = CNY6.50)
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