PTA Price will continue to Drop after A Brief Rebound

    In the week before the National Day, ZCE PTA price increased after dropping following the trend of commodity, and at the beginning of the week continued to drop influenced by the debt crisis in Europe and Wenzhou usury event. The TA1201 was once dropped to 8,320 Yuan/ ton, which is the low point in the year, and then because National Day approached, the futures price increased for two days. In the spot market, PTA, MEG market are still dominated by watching and seeing atmosphere, but the inquiry prices went up slightly, and the China Fiber PTA price index increased 50 Yuan to 9,450 Yuan/Ton compared to September 30th. Looking ahead in this week, it believed that under the influence of the macroeconomic environment, the PTA futures price may increased first and then dropped, and it is recommend investors to short-sell when it meet the high point.

    In the perspective of macro economy, Angela Merkel, German Chancellor said the German government was ready to reform banks which are weak in capital power, BOE and European Central Bank have taken a new round of loose policy, the FED Chairman Ben Bernanke has prepared to take further action to help vulnerable economy to recovery, and to boost the market risk preference. Last week, the stock markets and commodity markets in Europe and America are rebounded from the bottom. However, measures of resolving the banking crisis in Europe has not yet to be tested in this week, and it is not sure for Greek to get an aid loans, unless the euro zone will push out a comprehensive solution for debt crisis which could convince the market, otherwise, any future news regarding the debt crisis and banking are deteriorating will pressure the market. China manufacturing industry Pmi index rose to 51.2 in September, with Wenzhou usury event spreading, and it is possible for tightening domestic monetary policy remaining a long time.

    In October, PX equipments shutdowns in Asia are still more, but the news after a long period of speculation, now having little impact on the market. Now PX production profits up to 500 USD/Ton, which is higher than normal levels, and completely counteracted the positive factor of the device maintenance. In the later period, influenced by the downstream weak demand and finished equipments maintenance, the PX production profits may drop, and then weaken the PTA cost support.

    In this year, the demand of downstream textile industry is weak obviously. In August, the export value of China textiles and garments was 25.45 billion USD, which increased 26.4% Y-on-Y, but among which the contribution rate of price factor was 22.34%, and the export volume increased by only 2.78%. Europe, America and Japan have always been the main markets for China textile exportation, and now the debt crisis lead to deteriorating economic situation in Europe, and the USA is struggling at the edge of recession. Influenced by the reduced market demand and the improvement of competitiveness in Southeast Asia, China textile export will continue to downturn, even may appear negative growth. The negative impact of debt crisis to PTA has not been fully disappeared, and the domestic demand is also limited, and the crowding-out effect of high inflation towards consumption is emerging.

    From a technical point of view, the TA1201 rebound before the holiday is an oversold rebound, and the overall downward trend has not changed. It is expected that in this week, after a brief rebound, ZCE PTA price will continue to hit new low points, and it is suggested that investors to short sell TA1201 when the price is 9,000 Yuan/Ton, and the short-term goal is 8,000 Yuan/Ton.