20 June 2011 07:17 [Source: ICIS news]
By Judith Wang
SINGAPORE (ICIS)--Spot purified terephthalic acid (PTA) prices in Asia may fall further after falling to a six-month low last week, on soft downstream demand and huge capacity additions in China over the next three months, industry sources said on Monday.
PTA spot prices shed $12-17/tonne (€8-12/tonne) week on week to $1,178-1,193/tonne CFR (cost & freight) CMP (China Main Port) on 17 June, after hovering at around $1,190-1,220/tonne CFR CMP for more than a month, according to ICIS.
Most market players are pessimistic about the PTA market in the third quarter with a total 2.7m tonnes/year coming on stream in China through August, amid a slowing down of demand from the downstream textile industry.
Yisheng Dahua Petrochemical will beef up PTA production by 500,000 tonnes/year in early July, following the completion of debottlenecking work at its plant in early June.
Meanwhile, Jiangsu Sanfangxiang is expected to start up its 1.2m tonne/year PTA plant in mid-July at the earliest.
Zhejiang Yisheng Petrochemical, on the other hand, has ramped up to full production one of its two 1m tonne/year compressors at its PTA plant early last week, after achieving on-spec production on 9 June.
Its other 1m tonne/year compressor is expected to come on stream by the end of the month or in early July.
Sellers are in a hurry to offload cargoes to cut losses, while buyers are cautious given expectations that prices could fall further, market sources said.
A seasonal lull in polyester demand from Chinese downstream textile industry in July to August will intensify pressure for prices to fall, they said.
Transaction volumes at the benchmark China Textile City in Shaoxing declined to 5m-5.6m metres/day late last week, from 7m-8m metres/day a month ago.
“Demand for textile products has been dwindling in the past three weeks as the traditional peak season comes to a close at the end of June,” a major textile trader said.
“Electricity restriction will also be a problem for us in summer season. We have already received notice from the local government to shut our plants for half a month in July because of tight power supply,” a Zhejiang-based polyester maker said.
Separately, some players are worried that start-ups of a number of new polyester projects might be delayed to the end of the third quarter or the fourth quarter because of the power crunch, thereby curtailing PTA demand.
China’s manufacturing hubs, including the Zhejiang and Jiangsu provinces, usually experience serious power restrictions in the summer as electricity demand surges.
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