21 October 2011 05:50 [Source: ICIS news]
By Judith Wang
Spot PTA prices fell $60-65/tonne on 20 October to $1,080-1,120/tonne (€788-818/tonne) CFR (cost & freight) CMP (
Panic-selling caused by sharp falls in PX values drove spot PTA prices down on Thursday, with values in the PTA futures market declining 6%. PTA offers declined as traders attempt to liquidate long positions, market sources said.
“It looks like [a] second-round [of global] economic crisis is coming,” said a trader in Mandarin, adding that market players are quite jittery, wondering what to do next.
PTA is a raw material for the production of polyester, which goes into textiles.
Decreasing export orders for China’s major textile products on the back of continued weakness in the US economy and the debt crisis in the eurozone, as well as rising cloth inventory at Chinese factories, has dampened buying interest for polyester products, translating to much weaker consumption of PTA, industry sources said.
This week, the sales-to-output ratio of most polyester plants in
Slowing demand from western trading partners, coupled with rising domestic labour costs and the rapid appreciation of the Chinese currency – the yuan, saw the deceleration of
A domestic credit crunch as the Chinese government addresses its rising inflation problem by monetary tightening also plays a huge part in curbing overall demand.
PTA traders expect access to credits in
“I think prices will be very soft in the next two months due to demand slowdown and credit crunch, as consumers had no interest to buy clothes due to high inflation,” an end-user said.
In the Indian market, PTA demand is also slowing down because of ample domestic supply in the run-up to the Diwali holiday in late October, local market players said.
“Usually, the demand will be bad before holiday, but this year, it is extremely bad,” a source at an Indian polyester producer, which halved production to cope with the sluggish demand.
($1 = €0.73)
|ICIS news FREE TRIAL|
|Get access to breaking chemical news as it happens.|
|ICIS Global Petrochemical Index (IPEX)|
Asian Chemical Connections