FocusChinese PA prices to fall further on weak demand, high stock

14 March 2012 07:46  [Source: ICIS news]

SINGAPORE (ICIS)--China’s domestic prices of phthalic anhydride (PA) are expected to drop further on weak demand from the downstream dioctyl phthalate (DOP) sector and high inventory levels, industry sources said on Wednesday.

PA prices have declined by around yuan (CNY) 700-950/tonne ($111-150/tonne) from last month, a trader said.

The spot prices of PA were assessed at CNY11,450-11,550/tonne ex-works (EXW) in east China on 13 March, down by CNY800/tonne compared with a month ago, according to data from Chemease, an ICIS service in China.

In north and south China, the prices were at CNY11,550-11,650/tonne EXW and CNY11,600-11,750/tonne EXW, respectively on 13 March, a decline of CNY700-750/tonne and CNY750-950/tonne, respectively from last month, the data showed.

The prices fell because of weak downstream demand and market speculation in February, a second trader said.

Upstream orthoxylene (OX) producer Sinopec increased its OX offers by three times from CNY11,200-11,300/tonne to CNY11,900-12,000/tonne in January, which led PA prices to rise.

Downstream demand from the DOP, unsaturated polyester resins (UPR) and alkyd resin sectors traditionally recovers in every March, when the production rates in these sectors return to their regular operating levels after the Lunar New Year holiday, a market player said.

However, demand from some of the downstream sectors. such as DOP, has yet to recover as many DOP producers in north China have shut their plants given the weak demand, a DOP player said.

Meanwhile, PA inventory in the domestic market is currently high because producers were reluctant to sell in the previous month and now have to sell product at lower prices.

In addition, the weak PA market situation may cause OX producers to lower their offers in the near term, which will lead the PA prices to drop further, an OX player said.

“The current PA prices show a lack of confidence from PA market players,” a PA player said. “Seeing these unfavorable factors, the prices may continue to drop in the near term,” he added.

($1 = CNY6.33)

By: Lina Xu
+65 6780 4359

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