Fundamentals vs. Macro-parts PTA Price May Have Repeated Ups and Downs

After Chinese National Holiday, downstream manufacturers who stopped operation before the holiday began to make the cover, which drove the rebound of PTA price. At present, PTA futures rise back to 9000-Yuan level again and spot price is also steadily increasing. PTA price has already increased to 9700 Yuan in the domestic market and Taiwan cargo rebounded to 1260 dollars; however, the rebounding speed of the prices was slow. Therefore, this time of rebound may be the recovery of previous oversold. Real steadiness of PTA requires boosts of downstream polyester products.

First of all, from the upstream feedstocks of PTA; PX price of the overseas market dropped 95 dollars during the Holiday, while slowly grew back after the Holiday resulted from short supply. At present, PX price is around 1557 dollars. Considering the relativity, PX and PTA had consistent paces in September and the related coefficient between them is around 0.83; while the related coefficient between PTA and crude oil reached 0.95. These data shows interaction between cost oriented and demand oriented from PTA, PX and crude oil. That is to say, a. cost oriented from PX to PTA will transfer to demand oriented from PTA to PA, so PX will follow the step of PTA; b. the cost oriented from PX to crude oil will transfer to the demand oriented from crude oil to PX, so PX will follow the pace of crude oil. As both PTA and crude oil has increasing tendency recently, so no matter which PX follows, its price will eventually go up.

Judge from the import price of PX, the average price was 1479.51 dollars/ton in July and the average export price was 1133.42 dollars/ton. The increase of export price give support to PTA cost to some degree. Besides, maintenance of PX devices also drove the price up. (2 week time since October 8, Zhenhai Refinery is arranged to have maintenance due to wash of its adsorption tower. But its upstream aromatic hydrocarbon device continues to work as routine)

Second of all, see from the downstream polyester products. PTA price surged in the first half of September while polyester products failed to follow the increasing tendency timely. The profit of polyester products manufacturers reduced. However, when PTA slumped dramatically before the National Holiday, the profit of polyester products came again. Take Polyester Staple Fiber for example, if calculate according to the contract settlement price of September, the cost of PSF production was 14050 Yuan/ton and the loss was 50 Yuan/ton; while calculate according to the contract settlement price of October, the cost was 13720 Yuan/ton and the margin was 380 Yuan/ton. The increase of manufacturers’ margin improved the activity of them, which also stimulated the demand of PTA as well as the rebound of it. Besides, the successionally cover of the downstream weaving manufacturers brought the slight increase of polyester products. It is reported that the present production-marketing of polyester yarn manufacturers is above 100%, which is a favorable factor for PTA.

The demand of downstream weaving manufacturers stayed weak since this year. As for the export condition in August, the export amount of textiles and clothes in China is 25.45 billion dollars, increased 26.4% on yearly basis. See from the textiles export quantities, textile industry increase slowly and stayed at weak period. Europe, U.S.A and Japan are our important export markets. However, the declining of European economy caused by the debt crisis also led the continuous weakness of our exportation of textiles and clothes. As the whole market will not be stable in a short term, PTA price will be up and down repeatedly.