Zhengzhou PTA futures moved all the way higher last week (December 28 to 31), mainly being driven by continuous rise in international oil prices. The main contract 1003 closed at 8,138 Yuan / ton on December 31, up 32 points compared with the settlement price on December 30, a rise of 0.39 percent.
However, as the market faces abundant supply and drop down in demand, PTA futures market is likely to consolidate amid shocks after the New Year's Day and it will be difficult for it to continue its strong upward trend.
Low demand could prove to be a resistance for the upward trend of PTA market. As it is near the end of the year, downstream polyester factories face pressures of repaying their loans and interest and with funds being scarce; they are showing little interest in purchasing raw materials.
Polyester chips, polyester filament, and bottle chip markets are soft, sales rate of polyester industry is only 40 percent, due to which polyester industry continues to face downward pressures. Several larger polyester plants in Zhejiang Province say that they will reduce operational rate in January, so demand side of PTA looks difficult to improve after the New Year.
Prices of Paraxylene (PX) continue to remain in range-bound conditions as supply increases steadily. Asian Paraxylene is likely to witness the danger of excess market supply in the first quarter of 2010, because PX future prices may continue to weaken.
As of Wednesday in Asian market, FOB South Korea price fell US $10 / ton to close at US $1,093.5-1,094.5 / ton and CFR China closed at $1,110.5-1,111.5 / ton.
Fibre2fashion News Desk - China