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PTA expected to remain in weak consolidation
17
Jul '10
Zhengzhou PTA futures opened lower on July 15 and closed below 7,000-Yuan mark as the market plunged in late hours. The most active contract1009 ended at 6964 Yuan / ton, down 192 Yuan or 2.68 percent from the previous day.

At present, PTA is still in high-margin, high operating rate and high inventory position. Market operators continue to worry about tightening policies and foreign trade situation, PTA will continue to maintain weak trend without reverse conditions, if there is no major rebound in oil prices.

In PTA spot market, market sentiment in East China continued to weaken, offers from a few holders were around 7000-7050 Yuan / ton, buying volume was very light. Negotiation focus lowered to 6900-6950 Yuan / ton, firm offers were rare.

Market climate of Asian PTA spot sank in stalemate, trading atmosphere between buyers and sellers was light, and both sides were sidelined. Discussion focus for Taiwan goods slipped to US $840-845/ ton, firm offers were rare.

In the downstream market, PTA futures fell sharply and chip-spinning enterprises showed strong wait and watch mood. Offers from factories were around 9150-9300 Yuan / ton (payment in cash or three months acceptance). Main discussion level stayed at 9100-9200 Yuan / ton (payment in cash or three months acceptance).

Polyester staple fiber in Zhejiang market fell again. Offers from holders stood at 9500-9700 Yuan / ton, actual negotiation level was around 9350-9500 Yuan / ton. At present, polyester POY is around 11200-11250 Yuan / ton, polyester FDY is around 12,200 Yuan / ton, polyester DTY is around 12550-12650 Yuan / ton.

PTA fundamentals are weak. Upstream naphtha stock is on 15-year high level; PX shows excessive supply since the operation of additional capacity (3.8 million tons).

Textile exports have displayed a steady recovery trend, which will drive demand growth of PTA from downstream polyester plants. However, recent signs indicate that US economic recovery rate has slowed down and the government has cut its economic growth expectation.

Although Europe is getting out of European debt crisis and quagmire, economic growth outlook remains worrisome under tightening policies; textile export growth is expected to be affected. Therefore, market outlook of PTA will remain in weak consolidation.

Fibre2fashion News Desk


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