SINGAPORE (ICIS)--Asia purified terephthalic acid (PTA) prices are likely to remain supported in the third quarter of 2017 on expected tight supply and rebounding upstream energy and feedstock values, market sources said on Friday.
The expected tight supply will be due to more scheduled turnarounds at major PTA plants in the key market China in the third quarter, they added.
Inventory levels may not recover during this period of major plant turnarounds and some bullish sentiments could remain in the market, sources said.
Some PTA makers had already reduced supply due to ongoing turnarounds at their plants, causing end-users to source for spot cargoes in the domestic and import market.
They are looking for both local US-dollar ex-CMP (China main port) cargoes and also for US-dollar CFR (cost & freight) CMP imported cargoes.
There were numerous deals done for spot RMB cargoes.
There was an increase in the number of spot deals done for both CFR (cost & freight) and ex-CMP (China main port) cargoes, with key buyers in the downstream polyester and non-polyester industries sourcing for spot cargoes.
Hengli Petrochemical has extended the shutdown of its 2.2m tonne/year No 1 PTA line for an unknown period of time.
Market sources said the stoppage could extend for an additional 12 days.
It had initially stopped the line on 23 June for an unplanned shutdown for 10-15 days.
Hanbang Petrochemical remains in the midst of a two-week turnaround at its 2.2m tonne/year PTA plant in Jiangyin from 20 June. It is expected to restart on time.
Other turnarounds which are likely to happen sometime in the third quarter include Sanfangxiang's two 1.2m tonne/year lines in Jiangyin, and Shenghong Petrochemical's 1.2m tonne/year PTA plant in Lianyungang.
A key south China producer has also not restarted a major PTA line.
Market sources said Jialong Petrochemical could also conduct a turnaround at its 700,000 tonne/year PTA line sometime in July.
Key producer Yisheng Petrochemical could also stop one major PTA line in the third quarter. No other details were immediately available about the plans.
Polyester end-users are expected to maintain high operating rates in the near term as demand remains stable and is not expected to drop soon due to low inventory levels.
Further supporting PTA prices was bullish crude prices and feedstock uptrend.
Upstream crude futures had been on an upward streak since Thursday, after the US Energy Information Administration (EIA) showed gasoline stocks had fallen by 894,000 barrels in the week ending 23 June, greater than expectations of only a 583,000-barrel decline.
Distillate inventories, meanwhile, were lower by 223,000 barrels, contrary to expectations forecasting a rise of 453,000 barrels.
Feedstock paraxylene (PX) prices were also gaining throughout the weak, in line with crude oil and naphtha values.
PTA prices were last assessed on 23 June at $606-613/tonne CFR CMP, lower by $4-5/tonne from the previous week’s closing price, according to ICIS data.
(Top image: Photographer GERHARD BUMANN / Action Press/REX/Shutterstock)
Focus article by Paul Lim