By Malini Hariharan
Asian spot prices for polyester raw materials continued to fall last week as concern on lack of buying support from the China market where concerns about the health of the global economy dampened sentiment.
Purified terephthalic acid (PTA) prices declined to a 11-month low dragged down by weak demand and falling values for paraxylene (PX), writes Judith Wang on ICIS news. Spot prices were at around $1,100 cfr China late last week.
Developments in the PTA futures market have also not helped as prices on the Zhengzhou Commodity Exchange dropped by 6% last Thursday on concerns about the Euozone debt crisis and the weak US economy.
In the physical market, buyers took a backseat nervously watching developments. The textile industry is reported to have seen a decline in export orders and the sales to output ratio at polyester plants has fallen to 50-70% in the last month from around 100% in early September.
China's credit tightening measures also affected trading activity and some traders expected the situation to worsen in the fourth quarter.
Asia's other big market, India, has also failed to lend support to producers. PTA demand in the country has slowed down ahead of the Diwali holidays this week and some polyester producers have reduced production.
Meanwhile, spot PX prices softened by over $50/tonne to around $1,560/tonne cfr China last week while the October contract price remained undecided. Buyers, worried about the squeeze in margins, are looking for further reductions although producers are resisting as supplies are tight. But this may well be temporary as some PTA producers are reportedly eyeing operating rate cuts.