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Future trends of PTA not optimistic
26
May '10
In recent years, production capacity of China's PTA and PX has realized rapid expansion, due to which external dependence has gradually reduced, but import dependency of crude oil has increased for upstream raw materials, so cost is still an important factor, in price movement of PTA.

PTA prices have dropped rapidly in recent times. The cumulative drop is about 1,120 Yuan / ton or 13.04 percent. But cost support is difficult to reflect in the short term, due to substantial decrease of upstream crude oil, naphtha and PX prices.

PTA futures are weaker than LLDPE and PVC. NYMEX front-month crude fell from US $86 to $70 per barrel, a decline over 18 percent. Naphtha too followed suit and fell from above $780 to around $640 in Asian markets.

PX Asian prices also plunged from $1,050 per ton to around $900 per ton. But surplus situation has not improved in the market, so PTA spot prices are difficult to receive support from price decline of upstream market.

In view of front-month contracts, PX domestic prices have lowered from 8,300 Yuan / ton to 7,400 Yuan / ton; prices may fall further to 6,500 Yuan / ton, if supply pressure will not reduce when consumption gets into off-season.

Currently, PTA Chinese spot price has fallen to 7,350 Yuan / ton, as polyester chips and polyester filament markets are weak. Price difference between cotton and PTA is expected to reduce in the future.

The average historical spread between contract CF1009 and contract TA1009 is about 6,570 Yuan / ton. The future trend of PTA is not optimistic, as short-term stability is difficult to change medium-term weakness.

Fibre2fashion News Desk


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