By Malini Hariharan
The blog is back in action and would like to wish its readers the very best for 2011.
The start of a new year is a time for forecasts. And ICIS pricing editors have been busy gauging industry expectations. The blog will start with the fibre intermediates chain today where, not surprisingly, producers are very bullish.
Pic source: gotcheapbinoculars.com
Purified terephthalic acid (PTA) producers expect prices to scale new peaks in 2011 on demand from new polyester plants in China and India, writes Becky Zhang. PTA prices had hit a 15-year high of $1,570-1,270/tonne cfr China in November 2010.
ICIS estimates that 4.7m tonnes/year of new poly-condensation capacity in China is due this year, which would bring the total Chinese poly-condensation capacity to 33.5m tonnes/year. India, the second largest polyester production hub in Asia, is expected to introduce around 500,000 tonnes/year of new capacity in 2011, adding to existing capacity of around 4.3m tonnes/year.
In contrast, only three new PTA plants and one expansion project, with a total new capacity of 3.5m tonnes/year, are expected to be added this year in Asia - all located in China.
As written by the blog earlier, sourcing PTA is likely to be a headache for the next couple of years.
The other raw material for polyester, mono ethylene glycol (MEG) is also expected to see a strong 2011 with no new capacities due until 2013.
The lack of supply may propel MEG prices to new highs in 2011. Spot values hit a 29-month high in early November at $1,150-1,180 CFR CMP, according to ICIS.
"It's really difficult for us to locate more MEG contract volumes next year because almost all the major suppliers said their contracts had been snapped up," said a Zhejiang-based polyester maker.
Besides a reduction in contract volumes, buyers also expected contract terms to become stricter.
MEG majors SABIC, Shell and MEGlobal are reported to have reduced discounts offered to contract customers.
Caprolactam supplies are also likely to remain tight in 2011 as well, writes Junie Lim.
Producers estimate that the global demand for caprolactam to expand by 8% to 4.32m tonnes in 2011, with more than 58% of demand coming from Asia.
Demand for caprolactam would be strongly supported by Asia's growing automotive industry. Tyre-cord is a large and growing market, especially in China.
Only two expansion projects are in the pipeline for 2011 - one by Ube Industries in Thailand, and the other by China Petrochemical Development Corp (CPDC) in Taiwan,
These companies will add only 40,000 tonnes of supply to the market, most of which is likely to be absorbed in the respective domestic markets.
Tight supply of feedstock caprolactam will pose operational challenges for the nylon industry but producers do not foresee any difficulty in pushing through price hikes in the Chinese market where annual demand is projected to grow by 10% over the next two to three years.