PTA Will Keep Increasing Tendency in the Mid Term

Since August, fluctuations of PTA market intensified. In the beginning of the very month, contract 1201 dropped to 8600 mark under great pressure, while strongly rebounded to 10000 mark above. As the devices were under maintenance, the supple of spot goods were in shortage and the cost was increasing, PTA performs firmly and fluctuated from 9,500 Yuan/ton to 10,000 Yuan/ton.
Uncertainty of European and American debt crisis still exists

The weak global economic data triggered worry about slow-down of economy again. From one aspect, U.S. economic data shows its recovery power is still weak. From the other aspect, debt in euro-zone and crisis of bank liquidity falling into deadlock push up the global risk aversion. FED policy has been used to communicate that they would maintain the current interest rate to 2013. Possible policy measures afterwards (quantitative easing, the quality of loose, excess reserve rate) will depend on the degree of market turbulence in August and the new economic data set. Euro-zone countries have not reached a consensus over the seriousness of the debt crisis, and the behavior of preserving their own interests respectively and without regard to the current grim situation will delay the rescue plan. The risks of economic uncertainty in Europe and America will suppress PTA uptrend to some extent.
Domestic Currency Policy Tends to by Cautious

From the chain relative ration of seasonally adjusted CPI trend value, basically there is 8-9 months ahead of inflation year on year. From the leading indicators, high inflation point began to gradually decline from August. As a benchmark of raising the interest rate, the expectation of raising the interest rate caused by the uptrend of central bank bills’ release rate re-warmed again. However, under the weakness of domestic manufacturing, overseas financial turmoil and economic uncertainty, the probability of introducing over-tight policy is very low in a shot term; monetary policy may enter an observation period in the next month. Also subject to inflation expectations, monetary policy will not have obvious shift, but for the local areas may be a "liberal orientation" and policy fine-tuning. Overall, the four quarters of major improvements will be reflected in the expected level for the commodity market with a neutral impact
PX keeps increasing and Put up the producing cost of PTA

Since July, PX devices at home and abroad increased maintenance efforts and unexpected shutdown happened frequently, which resulted in significant tightening of supply in Asia. Relocation issue of Fujia Dahua 700,000 tons PX project is in the spotlight, and Dalian government officials had begun to discuss the Fujia Dahua Dalian aromatic plant closure issues, while without providing a specific closing time. In addition, rumors of CNOOC Huizhou 840,000 ton/year aromatics plant may delay restart boosted its popularity among regional traders and manufacturers. Exxon Mobil carried out its September PX contract price at USD 1,700/ton, increased USD160/ton compared with August PX contract price. PX spot price keep increasing, Asian PX prices rose from USD 1,346/tonne FOB Korea in July to USD1,635/ton FOB Korea in mid-August; the increasing rate is over 20%. PX demand remains strong, and PX prices are expected to keep upward trend, these factors will continue to push up the cost of producing PTA
Low Polyester Storage, Rising Rigid Demand

This year, prices of cotton and cotton yarn is extraordinarily weak in the market. The survival of small and medium cotton spinning enterprises face pressures generally. However, also as an important textile and chemical fiber raw materials, the performance of polyester is better than expected. After the second quarter, the downstream PTA, the polyester market significantly improved; its demand increased obviously; and after the completion of the inventory of the state in May, polyester mills remain at a low stock till now. PTA prices adjusted in the second quarter, polyester product prices rose instead of dropping. Lower raw material costs and higher product prices has greatly enhanced the margins of the downstream chemical fiber manufacturers, reversing a quarterly loss situation. Polyester filament and staple fiber mills saw operating rates rising; the survey found that many companies have fully used the reserve capacity. Rate of domestic production and sales of polyester plant rose to 100% -150%. Due to raw material prices, polyester downstream textile purchases increased. Polyester factory inventories rose slightly 7-15 days on average and the average operating rate remained at 80%. With the arrival of textiles peak season in fall, polyester downstream rigid demand for PTA is still relatively strong