China : High crude fails to stimulate PTA prices

CHIC is one of the most influential fashion trade show in the world. |Visit Now| | Ad

Home / Knowledge / News / Textiles / High crude fails to stimulate PTA prices

High crude fails to stimulate PTA prices

21
Apr '08

Sky-rocketing international crude oil prices failed to speed up PTA prices in the domestic front. Since March 24, Zhengzhou PTA has seen slump of as much as over 600 points, depicting a severe fall after it rebounded during New Year festival.

The main reason behind the poor performance of PTA is that, during April textile and apparel demand failed to show any sign of prosperity. In this time, resulting in poor demand from downstream PTA market, particularly terminal demand has lost confidence; the market has overlooked increased PTA support from downstream crude oil under the prevailing atmosphere of pessimism.

On one hand, after international crude oil prices surged, PX spot supply and demand of global market seemed tight and re-gained momentum for short term transactions with increased PTA cost support. On the other hand, PTA underwent a substantial adjustment in previous time; domestic PTA spot has declined nearly 300 yuan per ton below costs. Therefore, PTA requests short-term technical rebound, but terminal demand deterioration will inhibit its rebound space.

In the past week, domestic market of PTA was relatively dull, but PTA spot market saw stability. Mainstream price ranged 7750-7800 yuan per ton, for cash payment and out cans, by the end of the week. Mainstream offers from Taiwan and South Korea were still stable at US $965-968 per ton (CFR China 90 days).

Calculated on April PX price at $1260 per ton CNF China settlement, cost of domestic PTA providers is about 7,950 yuan per ton, it will be more higher to likely about 8,050 yuan per ton, if taking consideration of increases of other material costs in 2008, in this case, domestic manufacturers will lose nearly 300 yuan in producing one ton of PTA. It is also expected that majority of domestic PTA manufacturers will cut back their production.

More Textiles News - China...