Asia’s purified terephthalic acid (PTA) prices strengthened after the Lunar New Year holiday as surging feedstock paraxylene (PX) prices and the expectation of a demand pick-up in the downstream polyester sector drove up buying interest.
However, sentiment is fragile and the market is focused on the trend in China’s PTA futures and demand recovery in the country. While the former is unpredictable, the latter seems to be sluggish this year because of China’s slower GDP growth.
The outlook is bearish because Asia’s supply growth is expected to outpace demand in 2012. Two massive new PTA start-ups are due in China this year – a 3.9m tonne/year capacity and an 8.4m tonne/year facility. Demand across the region is expected to increase by 7.5m tonnes in 2012. Asia’s PTA producers have been running at reduced rates since the end of last year because of poor margins, which are likely to continue for the most of 2012 because of long supply and slower demand growth in China.
In Europe, Artlant PTA’s new 700,000 tonne/year plant in Sines, Portugal, will bring length to the market. Downstream polyethylene terephthalate (PET) demand is pulling on domestic supplies as PET imports fail to arrive, so requirements for PTA in Europe have been healthy. PTA prices tend to follow the upstream PX trend.
US PTA sources are expecting price rises in coming months as high season for the production of plastic-bottled drinks approaches. However, PTA prices follow US PX prices, which are influenced by the Asian PX contract price. Tight PX supply in Asia is not affecting availability in the US PET market, but is influencing price.