The Purified Terephthalic Acid Sweet Spot

Business, China, Company Strategy, Economics, Fibre Intermediates

PTASept27

By John Richardson

WHEN is a recovery a sustainable recovery? This a key question for chemicals companies as they prepare their budgets for 2014.

What has happened this year in both polyethylene (PE) and the polyester chain has surprised some people.

China’s polyester demand was higher than expected in July and August, leading to a big recovery in purified terepththalic acid (PTA) prices (see the above chart) and margins, says our excellent ICIS pricing Asia fibre intermediates editor, Becky Zhang.

Although PTA prices have since fallen back, this could be explained by the end of China’s peak manufacturing season.

Stronger polyester demand has been attributed by some market players to better-than-expected textiles and garment orders from the West for the Christmas season – ergo, perhaps, a strong cyclical recovery in Western economies that will support all sorts of businesses through 2014.

But maybe a more important reason why PTA has enjoyed a “sweet spot”  is a lull in capacity expansions in China. After Yisheng Petrochemical started-up in January, the next scheduled start-up isn’t until towards the end of this year, perhaps in October or November. This is when the 4.5m tonnes/year Xianglu Petrochemical plant is expected to be commissioned, says Becky.

Meanwhile, during this lull, downstream polyester expansions have continued apace, with 3.75m tonnes/year added in China and a further 1m tonnes/year in India, adds Becky.

Next year, sadly, is a different proposition altogether. Becky estimates that 10m tonnes/year of more PTA will be added in China and 2.2m tonnes/year in India.

The blog is also worried that the availability of financing in China has been a key factor in the recovery in PTA and other chemicals and polymers. There is a fairly good chance that liquidity will be tightened in China in 2014.

And the long-term fundamentals for the textiles and garments industry in China might be very challenging.

This is only one scenario, of course, and we could very easily be wrong. We would love to hear other views.

PREVIOUS POST

Irrationality And Staying Solvency

26/09/2013

By John Richardson JOHN Maynard Keynes, the famous economist and speculator ,  ...

Learn more
NEXT POST

China And The New IPCC Report

30/09/2013

By John Richardson THE blog isn’t a scientist and it has also often discussed ...

Learn more
More posts
Global polyethylene: Supply is not the problem, it is demand
24/06/2019

By John Richardson WHEN people talk about supply it is very often because it is much easier to quant...

Read
Drone attack shows lack of Iranian govt control over competing factions
21/06/2019

The following opinions are the personal views of the author and do not express the views of ICIS &nb...

Read
China’s polyethylene demand in 2019 now at risk as slowdown gathers momentum
21/06/2019

By John Richardson JUST when most of us thought we had figured out China’s polyethylene (PE) marke...

Read
Iran’s alleged attacks on shipping likely a response to US targeting of petrochemicals exports
21/06/2019

The following opinions are the personal views of the author and do not express the views of ICIS As ...

Read
China PP demand at risk of 20 million tonnes shortfall in 2019-2025
19/06/2019

By John Richardson THE CHANCES of some kind of trade deal have edged a little higher following the a...

Read
China real estate a growing stress point for global chemicals demand
17/06/2019

By John Richardson WE ALL know, or at least we all should know, just how important is the Chinese ec...

Read
Environmental credits separate polymer Winners and Losers as the world divides
14/06/2019

By John Richardson THE WORLD is becoming a much more complex and fragmented place as the consensus a...

Read
Trade War: 88m tonnes of lost polymers demand despite the boom in Asia ex-China
12/06/2019

By John Richardson SURE, there are tremendous opportunities for petrochemicals and polymers companie...

Read

Market Intelligence

ICIS provides market intelligence that help businesses in the energy, petrochemical and fertilizer industries.

Learn more

Analytics

Across the globe, ICIS consultants provide detailed analysis and forecasting for the petrochemical, energy and fertilizer markets.

Learn more

Specialist Services

Find out more about how our specialist consulting services, events, conferences and training courses can help your teams.

Learn more

ICIS Insight

From our news service to our thought-leadership content, ICIS experts bring you the latest news and insight, when you need it.

Learn more