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Shocks & adjustments projected for petrochemical sector
Jan '09
The chemical fibre raw materials or the petrochemicals industry is an important component of the textile industry. Purified Terephthalic Acid (PTA) of aromatic category, Ethylene Glycol of ethylene category and Paraxylene are main raw materials for synthetic fibres. In late 2008, with crude oil prices in international market falling from a record high to new record lows, the chemical fibres market also experienced ups and downs.

In 2009, this market is expected to undergo further shocks and adjustments, due to the influence of combined factors both bullish and bearish. The market trends depict, a not so optimistic outlook in 2009. Since the country's total textile production capacity is very large and dependence on the markets of US, EU and Japan too high, in the current global economic crisis, exports from the sector are expected to be affected to a large extent in 2009.

This is expected to directly affect the demand for chemical fibre raw materials. Domestic new capacity of Paraxylene in 2009 is expected to reach 2.14 million tons, a vast majority of which is projected to be sold in domestic market and the rest to manufacturers of PTA in East Asia and the global consumption is expected to go down after having reached its peak in 2007.

New capacity expansions for PTA are expected to slowdown in 2009, but a still a few capacities which have competed more than 75 percent of their installations in 2008 are expected to go on stream in 2009, of which Chinese new capacity output of PTA is projected to be around 800,000 tons.

New suppliers of Ethylene Glycol will face further pressures as global production capacity will be excessive. The Middle East region will become the focused area of production capacity expansion, and its main target market will be China. China is expected to import 5.48 million tons of ethylene glycol in 2009, an increase of 2.4 percent over the previous year; leading to a grim market situation in China.

Fibre2fashion News Desk - China

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