Downstream expectations of production cost increases may affect Europe PTA, DMT
Caroline Murray
01-Mar-2019
LONDON (ICIS)–Production costs for purified terephthalic acid (PTA) and dimethyl terephthalate (DMT) are under pressure to increase if the dominant Asian market is to be adhered to, but not as much as the markets were originally anticipating.
– PX prices end downturn
– PET bottling season imminent
– Economic mood affects PTA and DMT
PX PRICES
Paraxylene (PX)
prices ended a four-month downturn in February,
and look set to continue to rise. European
values tend to be influenced by Asian dynamics,
as can be seen in the following graph.
–
Downstream polyethylene terephthalate (PET)
sources are still counting on an increase, but
the impact of an uncertain Asian sector is
causing hesitation in Europe.
PET SEASON
The seasonal
uptick in the PET bottling season is imminent
and March is usually when the buying frenzy
begins.
While contractual offtake is decent, buyers are reluctant when it comes to spot purchases. This is partly due to import commitments and the general macroeconomic mood.
How product flows react to the much-publicised downstream buyers’ attraction to first-quarter imports of PET is as yet unclear. Indeed, pre-booked PET imports looked like a bad deal earlier in the year, and most recently offers from Asia have failed to entice Europe-based purchases.
PTA offtake depends largely on the major PET sector, however, PTA purchases are mostly formulaic, based on monthly PX price moves, as are those for DMT.
ECONOMY AFFECTS PTA,
DMT
Global economic concerns are
creating a cautious short-term outlook and
downstream demand in dominant China has
disappointed. As a result, anticipated PX and
therefore PTA and DMT price hikes going forward
have been dampened to more moderate
expectations this week.
That said, an uptick in Asia on 1 March may signal a return to positivity, but it is impossible to say at this stage.
The following graph shows the difference between DMT and its cheaper counterpart PTA.
–
DMT contracts are agreed using a calculation
with monthly PX and include methanol on a
quarterly basis.
First-quarter methanol prices dropped by €78/tonne amid plunging energy values, after a series of quarterly increases, thereby influencing the extent of the decrease in January DMT pricing.
PTA is largely used in the production of polyester fibre, which in turn is used to make fabrics for apparel and home furnishings such as bed sheets, bedspreads, curtains and draperies.
DMT is used to make polyester fibres for textiles, resins for drink bottles and films for audio-visual equipment and packaging.
Picture source: Alex Segre/REX/Shutterstock
Focus article by Caroline Murray
Global News + ICIS Chemical Business (ICB)
See the full picture, with unlimited access to ICIS chemicals news across all markets and regions, plus ICB, the industry-leading magazine for the chemicals industry.
Contact us
Partnering with ICIS unlocks a vision of a future you can trust and achieve. We leverage our unrivalled network of industry experts to deliver a comprehensive market view based on independent and reliable data, insight and analytics.
Contact us to learn how we can support you as you transact today and plan for tomorrow.