PTA Price is Stuck in a Down Trend
Author: Dec 01, 2011 11:06
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168tex News: Crude oil price keeps firm. PTA industry tycoons plan to stabilize the PTA future’s price by cutting production. But the external macro economy continues to deteriorate, which greatly hit the confidence of market players. The dollar index goes up strongly that curbed bulk commodity price rebound. By the closing of the end of year, PTA upstream and downstream market finance is tightening. Polyester and textile market is slack. Under the background that has multiple negative factors, PTA price is stuck in a down trend.
European debt crisis hits market confidence.
European debt is becoming worse and worse, Spain and Belgium has been down graded, and becoming the new focus of the global market. The debt crisis of the Euro zone is spreading and expanding, on one hand, it aggravated concerns of market players towards economic recovery, and on the other hand, it will lead to a slow down of the Euro zone economy, which will further cut the global demand of bulk commodity.
Euro weakens and the recent American economic data is relatively strong that boosted US dollars up. The up trend of US dollar since Nov is distinguishable, and it is challenging the peak of Oct. When Euro debt hits market player confidence, and US dollar rebound that brings bulk commodity to a negative situation, bulk commodity price is hard to bounce back. Now crude oil price has fall from a hundred CNY level and the negative influence of external economic environment to PTA future has not faded away.
Domestic economic growth is slowing down.
Currently, China’s economic growth has been slowed down. On one hand, external market weakens that brings some influence to exportation, and on the other hand, domestic economy need to do some adjustment during the period of global economy slowed down. Under a back ground that investments, consumption, and exportation slowed down synchronically, China bulk commodity price lacks the foundation to go up in the short term.
After a regulation, China commodity price has fallen down to some extent, comparing with the high level in the beginning of the year. But high labor cost, high feedstock price, and low export exchange rate has become a mechanical damage to enterprises. Enterprises are still facing the difficulty of high cost and reduced profit. Banks are quickened to withdrawal of funds when the end of year is coming. In the short term, enterprises are mainly reducing their stock and withdrawal of funds, instead of continue to expand production, or actively buy in feedstock. For the whole PTA industry chain, the influence caused by domestic economy slow down and a tight budget at the end of the year is direct and notable.
PTA downstream market sees in winter in advance.
With the pressure of both future’s and spot’s price went down, PTA manufacturers chose to stop to checking and repairing one after another. Several PTA tycoons will probably come to an agreement to cope with the current industry crisis through stop production and support value. A short term of checking and repairing is beneficial to stabilize the industrial chain and shore up market confidence. But the overall industry rebound also depends on the situation of economic recovery. Now crude oil price, on cost aspect, does not play a significant role to PTA price, and a strong PX price, which is on the upstream side, forms a burden to PTA price, while in the downstream polyester market, there is a big capacity increase. In the situation of a weak end demand, PTA downstream will see in winter in advance.
Over the years, China textile enterprises are taking the advantage of low feedstock and labor cost, quickly taking up the oversea market developing fast. But recently, for labor cost and feedstock cost increase, the national competitiveness decreased, foreign trade order loss seriously. Cotton price fluctuated and now it is around 20 thousand CNY level. If there is no support from the national acquisition policy, in addition with the pressure of increased new cotton and a depressed market, cotton market has already broken down. Therefore, when PTA downstream market sees in winter in advance, and textile market will still be slack, it is difficult for PTA future’s price to rebound and go high.
To sum up, although previously the main PTA future’s price has been stabilized in a hundred CNY, now it has fallen back below 8000 CNY, and kicking a new bottom of 7802CNY/t. Not only for the influence of unstable external market, but also influenced by the negative domestic economy and slack downstream market. Therefore, under the background of multiple negative factors, PTA is stuck in a down trend.
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Editor: Candy From: 168Tex.com
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