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Adjustments likely due to high PTA supply
Aug '10
Zhengzhou PTA futures ended lower on August 20. The most active contract 1101, closed at 7,828 Yuan / ton, down 106 Yuan from the previous day. The stock market weakened early in the morning, depressing the sentiment in financial market, while PTA futures lost support from continued drop of international crude oil futures.

The spot price of PTA futures has maintained high level and also remains high in three other parameters (high-margin, high operating rate and high inventory). In addition, market concerns continue over tightening policy and market situation at home and abroad, therefore, PTA outlook is expected to follow a consolidation trend.

Crude oil futures at New York Mercantile Exchange (NYMEX) extended recent losses on August 20, the settlement price hit six-week low, higher dollar and lower stock market further pressured oil prices under the circumstances of gloomy prospects for economic recovery.

September light sweet crude oil futures at NYMEX fell by US $0.97 to $73.46 a barrel, down 1.3 percent. October contract settled down by $0.95 to $73.82 a barrel, down 1.3 percent. October Brent crude at ICE Futures Exchange fell $1.04 to $74.26 a barrel.

Weak economic data makes traders worry about future demand of oil. High crude oil supply exacerbates the adverse impact of weak global economic conditions on oil prices.

Paraxylene markets in Asia rose steadily in the previous week. FOB Korea closed at 914-915 / ton on Thursday, CFR Taiwan closed at $928.50-930.50 / ton, representing an increase of $14 and $15/ ton, respectively, from the previous Thursday.

Based on this support, PTA futures rebounded to a 3-month high point in the week, but the follow-up increase in prices, encountered resistance.

In addition, most polyester enterprises in Zhejiang Province have gradually shut down or have reduced capacity utilization due to the implementation of power quota policy.

While overall inventory pressure of polyester factories is not great, procurement demand for raw materials has reduced due to electricity outages. As operating rate of PTA plants remains at a high level, supply pressure on the market may gradually increase. Therefore, PTA market requires adjustment due to lack of demand support in the short term.

Fibre2fashion News Desk - China

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