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Rebound in PTA prices may face resistance
07
Jun '10
Zhengzhou PTA futures continued its weak trend on June 4, which led to a decline even after a higher opening. Contract-1009 closed at 7,458 Yuan / ton, down 72 Yuan, or 0.97 percent compared with the settlement price on June 3.

Crude oil futures at the New York Mercantile Exchange (NYMEX) fell 4.2 percent on June 4. July contract of light sweet crude at NYMEX fell US $3.10 to $71.51 a barrel, the largest percentage drop since February 4 and the lowest since May 26.

Terminal demand of PTA is going to enter off-season, which will suppress PTA prices. In general, China's traditional off-season of textile production and marketing is from June to August each year.

PTA spot atmosphere was weak on June 4. Offers for domestic spot were at 7200 Yuan / ton or lower, some buyers made counteroffers lower to 7,100 Yuan / ton, buyers held wait-and-see sentiment at the price of 7,150 Yuan / ton.

Offers for PTA spot produced in Taiwan were still at US $860-865/ ton, buyers then counter offered at US $850-855/ ton, most of them were watching, as futures market stayed at a weakening high level.

MEG continued to fall to around 6,200 Yuan / ton; talks for small volume trade were around 6150 Yuan / ton or higher. It is reported that one deal was made at 6100 Yuan / ton. Trade volume in mainstream market was light.

Prices of Paraxylene mainly declined in the week. As of Thursday, FOB South Korea closed at $904.5/ ton and CFR Taiwan closed at $922.5/ ton, both falling by $8.75 / ton from Thursday last week.

Cost side will create negative impact on PTA, as raw materials continue to lower price focus. Meanwhile, as domestic PTA producers achieve lucrative profits, they basically keep operating rate above 90 percent, resulting in an abundant supply in domestic spot market.

However, downstream polyester market faces poor sales situation, market focus continues to decline. June is the low season of polyester demand; it will gradually decrease PTA demand.

Therefore, the oversupply situation of PTA can hardly improve in the short term; market rebound will face greater resistance in the coming days.

Fibre2fashion News Desk

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