Comment: Fundamentals Weak PTA Stays Non-interest

    PTA price continues to decrease since Spring Festival this year. Driven by cost and demand because of the devices failure problem and supply of PX, PTA price showed strong and rebounding tendency; but it fell back again in mid September. Fundamentals is expected to be weak in the afterward market and the price will keep shaking and decreasing in the long term.

    Due to the PX supply problem which had been hyped during June and July, PX price increased dramatically and got a level that as high as it after Japan Earthquake. In mid September, European debt crisis became even more severe. The high unemployment rate in US and other non-interest factors made the macro market pessimistic. As a result, crude oil price slumped and PX price began to adjust. At present, PX price is still in consolidation and has already fallen from 1715 dollars/ton to 1550 dollars/ton. CNOOC will restart its 840,000 ton/year PX device in Huizhou soon; the PX supply may get loose then. Cost declining of PTA caused by the feedstocks’ price decrease led the falling space of PTA price even bigger.

    Compared with the cost, present weak demand is much more suppressive for the PTA prices. Traditionally speaking, the busy season of textiles and apparel is coming to an end, but the demand stays weak all along. The bad stocking activity of the weaving manufacturers directly resulted in the increase of the polyester yarn’s inventory.

At present, the storage of PSF has already increased from the one-day amount in mid September to two-week amount. Sales pressure rose due to the high storage data and led to the decrease in operating rates. The storage of filament also increased to a highest level in this year. The situation is even more serious for the weaving manufacturers. Products’ inventories and financial difficulty both brought them to deficit. The present operation is only for loans and satisfies the employees’ salary.

    New PTA capacities have been put into operation basically and all the devices are fully loaded. As the supply is stable, the demand shows declining tendency. Therefore, the inventories of PTA will bring stronger strike for the PTA prices.