22 February 2012 05:40 [Source: ICIS news]
By Judith Wang
Prices fell this week, snapping two months of steady increases since December 2011, as export transactions subsided.
Spot polyester staple fibre (PSF) 1.4D slipped $0.01/kg ($10/tonne, €7.5/tonne) to $1.62-1.64/kg FOB (free on board) NE (northeast) Asia, while values of partially oriented yarn (POY) 150D/48F eased by $0.02-0.03/kg FOB NE Asia to $1.68-1.70/kg FOB NE Asia, according to ICIS.
Buyers have retreated to the sidelines after seeing declines in prices of feedstocks purified terephthalic acid (PTA) and monoethylene glycol (MEG).
Benchmark PTA prices slipped by $15-18/tonne to $$1,175-1,196/tonne CFR (cost and freight) China, while MEG values dropped by $27-28/tonne to $1,074-1,081/tonne CFR China in the week ended on 17 February, ICIS data showed.
“Polyester prices closely follow feedstock prices. If feedstock prices started to drop, then producers will [cut] polyester prices to entice buying,” a northeast
Weakening cotton prices may also be driving down the demand for polyester. Polyester is a substitute raw material to cotton in textile manufacturing.
In China, polyester demand from the downstream weaving and spinning sectors has not recovered as well as expected after the Lunar New Year holiday lull, with domestic polyester yarn producers currently sitting on 16-27 days’ worth of inventory. Prior to the holidays in late January, these producers only had 4-13 day’s worth of inventory on hand, industry sources said.
“The general demand is not recovering as well as expected. We are at a very difficult position now: sales are slipping while inventory are increasing,” a Chinese producer said.
The sales-to-output ratio at most Chinese polyester yarn plants are currently at 40-60%, down from 100-130% prior to
But the decline in polyester prices may be limited by firm prices of upstream paraxylene (PX) – a feedstock used to make PTA, which in turn is used in polyester production.
PX prices were assessed at above $1,600/tonne CFR China levels last week, up from around $1,400/tonne CFR China in early December 2011, according to ICIS.
Polyester demand in
Indian and southeast Asian producers have also been selling more cargoes to their respective domestic markets, they said.
($1 = €0.75 / $1 = CNY6.30)
Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections
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