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Chinese PTA output to dip in Sept
05
Sep '11
PTA output is expected to fall 20 percent in September 2011 compared with August. About 1.50 million tons of PTA production capacity will shut down for maintenance in September and October in China.

However, about 1.20 million tons of new PTA capacity will enter into production over the same period, so the impact of maintenance expected to be limited and PTA supplies will be relatively stable.

In the just concluded week, Asian PX price maintained high level oscillation around US $1,660 / ton, as over seven million tons of PX capacity alternately went in to maintenance mode beginning from August.

High PX prices will continue to bring strong support to PTA. But given the current spread of US $700 / ton between PX and naphtha, companies are reaping high profits.

The market will gradually digest bullish factors from upstream market; therefore, PTA price is unlikely to extend its rally.

September to October is usually the consumption season of polyester, but downstream demand is bleak this year, factories essentially procure materials on demand.

With high inflation, textile enterprises are also facing financial constraints and pressure of rising labor costs.

Based on the foregoing analysis, currently continuing rise of PTA price is mainly due to strong cost support from upstream products and rigid demand from downstream sector that has low inventories.

However, international economy is clearly slowing down and downstream demand is still sluggish. Under such circumstances, it is expected that chances of PTA price rising above 10,000 Yuan per ton will be limited.

Fibre2fashion News Desk - China

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