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Petchem markets on a bull run

China, Fibre Intermediates, Markets, Olefins, Polyolefins
By John Richardson on 14-Oct-2010

By Malini Hariharan

The Chinese are back from their holidays and they are buying. This coupled with supply constraints and firm crude prices is fuelling a surge in petrochemical prices.

Paraxylene (PX) prices hit a 2-year high this week on speculative activity and production problems at a couple of Chinese plants, reports ICIS news. Spot numbers are at $1265-1275/tonne cfr China, up $150/tonne from last week.

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Pic source: livetradingnews.com

Monoethylene glycol (MEG) producers are pushing for a $120/tonne increase in November contracts while spot prices have shot up by $155-160/tonne in the last month to $945-960/tonne cfr China.

Fibre intermediate producers are no doubt looking at the strength in downstream markets when raising their price expectations.

Purified terphthalic acid (PTA) is trading at 25-month highs of $1025-1045/tonne cfr China. Prices of polyethylene terephthalate (PET) bottle-grade chips are running at over $1300/tonne fob Korae/China – a level last seen in May this year. And polyester fibre and yarn prices are rising because of a shorfall in cotton production.

Caprolactam is also nearing record highs with prices rising $70-100/tonne this week to $2670-2730/tonne cfr China. Supply is tight due to plant turnarounds while demand was firm with the start of the peak manufacturing season in China.

The lifting of government restrictions on industrial energy use in China’s Zhejiang province – the country’s capital for textile production – is also said to have boosted the production of nylon yarn

Polymer markets are also seeing a surge in prices and buying activity with polyethylene prices moving up $40-70/tonne in China.

Offers for polystyrene (PS) and acrylonitrile butadiene styrene (ABS) are up $50/tonne on rising feedstock costs.

The strength in markets is good news for producers who have been cautiously optimistic about Q4. But with costs also rising more price hikes would be needed to preserve margins. Will the bull run continue?