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PTA's golden period about to end
04
Jul '11
PTA followed cotton in the rally, which saw prices rising dizzily in 2010. Polyester staple fibre, which is a downstream product of PTA, witnessed an increase in demand as a substitute to cotton, due to which PTA was in tight supply.

But in the second half of this year, with the launch of new capacities, PTA's tight supply will be converted into relaxed supply.

As of the end of 2011, Chinese PTA production capacity will exceed 20 million tons, growing at a stupendous rate of 29 percent.

The country's supply capacity will exceed 1.7 million tons / month once the PTA plant of Sanfangxiang is put into operation in August. Import gap will only be 200,000 tons, against monthly imports of 500,000-550,000 tons at present.

Competition for market share between internal and external capacities will inevitably lead to price wars.

According to industry estimates, 2011 polyester production in China may increase by only 10–12 percent, due to the impact of macro-tightening, economic slowdown and textile downturn.

On one hand, new PTA capacity is rapidly released, while on the other, downstream demand growth is less than the expected, due to which PTA's golden period is about to end.

Fibre2fashion News Desk - China

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