Downstream Demand is Weak and PTA Prospect is Grim

    Recently, with the ease of Europe debt crisis and favorable news of macro aspect, the domestic stock market rebounded strongly, and commodity prices also stopped drop and rose again. However, the PTA price rebound tread is weak because of the weak demand.   
    Europe Debt Crisis Eased and Macro Aspect Improved

    On Oct 27th, the European Union summit reached an agreement on the package arrangement of the Greek debt write-offs, strengthening European finical stability tools and bank recapitalization program. The Greek debt problem may be solved hardly in the afternoon market, but the negative effects of Europe debt crisis shall be reduced in the short term. In addition, Europe central bank announced to down regulate Euro zone main interest for 0.25%, which dropped from 1.5% to 1.25%. Meanwhile, the latest report published by US Department of Labor showed that the USA unemployment relief number on last week dropped bellow 400,000, which brings positive signal to employment market.   
    Supply and Demand Contradiction will Gradually Appear

    Generally, the domestic PTA supply volume increased steadily, but the demand volume was reducing gradually. Currently, PTA equipments operating rate remains full load level and the domestic output is stable. Meanwhile, the import volume increased continuously. The Customs data showed that the PTA import volume was 514,300 tons on Sep, 2011, which increased 50,900 tons compared to August and increased 25,200 tons Y-on-Y. The downstream polyester operating rate was 87.5% and the loom load index in Jiangsu and Zhejiang was 68%, and the circular machine load index in Guangdong was 30%. It is reported that the downstream weaving factories were struggling to survival because of the excessive stock and tight capital, and a part of factories had the reduction plan. Now the peak period of textiles and apparels consumption is close to the end, and the textiles and apparels industry was likely to enter the winter in advance. Generally calculating, the domestic PTA supply volume will break 2,200,000 tons but the downstream polyester industry consumption volume was 2,000,000 tons at most, and the excessive supply pressure will gradually appear. Thus, the PTA supply and demand pressure will be high and the price may be pressured.   
     PX Price Departs from Crude oil and Cost Support is Weakened 
    On last week, PX overseas price dropped from 1,578 USD/Ton to 1,418 USD/Ton, and the drop rate was 160 USD/Ton (10.14%). The upstream crude oil price remains strong, and NYMEX crude oil index increased 1.05% weekly and closed at 94.06 USD per barrel. The PX price departed from PTA price apparently, and the promote function of crude oil for PTA price was limited, and PX cost support function to PTA will be weak. However, it is probable the potential favorable factors in future PTA market. On one hand, the spring festival is in January this year, thus the downstream factories need to stock before the holiday, if the market speculate the PX supply, its price may increase and form cost support to PTA. On the other hand, a part of USA area may become cool in advance, and the warm demand in winter may stimulate oil price. Thus, when entering November, the current low stock and consumption anticipation of heating oil will be the important factor supporting oil price.