Continuous Drop and High Capacity of PTA Caused Changes in the Industry
Author: May 28, 2012 16:19
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PTA, known as Purified Terephthalic Acid, is used in the production of polyester chips and polyester fiber, and soda bottle, packaging film, polyester and textiles etc after further procession. PTA industry develops rapidly in China under constantly increasing downstream demand. The production and marketing in this industry has stayed at the first place for several years. However, the developing pace among the expanding PTA industry and the upstream and downstream market becomes unbalanced and a lot of problems including supply, competition and profits arise.
Firstly, the prices of PTA declined and the profits also fell down
Different from radical fluctuations in previous two years, the PTA market became very mild since this year. Affected by the surged price of crude oil in Jan., PTA price rose to 9,200 Yuan/ton. However, the market price was blocked due to the slack demands. In addition, PTA had been deadlocked in Feb. and it was slack season in Mar., so the contradiction between supply and demand surged and the market price fell to 8,600 Yuan/ton again. After the reduction of production in the factory, the market entered into slightly adjusting period. The price of crude oil has stayed at a high level for a long time, so PTA sank into dilemma due to high cost and weak demand. In Jan., the manufacturers turned into deficit instead of profit, and then the loss rate expanded to 300 Yuan/ton or above during Feb and Mar. The average profit lost 103 Yuan/ton from Jan. to Apr. This was unbelievable that the profitability of the manufacturers would take a turn for the worse while the profit was still over 1,000 Yuan half year ago.
 Secondly, expanding production capacity aroused industrial worry
 Although the production capacity of PTA was very high, the gap still existed in the supply side; the expansion enthusiasm was still very high caused by factors like high profits previously.
According to the statistics, the production capacity of PTA in 2011 increased 5.49 million tons, while PX only rose to 0.8 million tons of production capacity, and the production capacity of the downstream polyester surged 3.45 million tons. It needs to use 0.85 tons of PTA for producing 1 ton of polyester, and it needs to use 0.65 tons of PX for producing 1 ton of PTA. In the chains of PX, PTA and polyester, it can be seen that PTA has the largest expansion among the three products, which leads the imbalance of production capacity much more serious in the upstream and downstream markets, the increased capacity of last year has been thrown into the market and the market supply increased. The import volume of PTA was close to 1.4 million tons from Jan. to Mar. an increase of 12% year-on-year. But the downstream couldn’t recover after a setback this year, the exports were sluggish and the domestic demands were also soft. Under the situation of supply exceeds demand for PTA, the price war was constantly, so that the profits were withered.
It must be pointed out that the expansion of PTA just starts. There will be 9.3 million tons of PTA put into production this year, such as Jiaxing petrochemical, Far-east petrochemical and Yisheng petrochemical etc. And another 8 million tons will be put into investment next year, including Hengli petrochemical, Taiwan petrochemical of Ningbo, Yisheng and Shenghong and so on. The domestic output can reach 37.9 million tons and 5.2 million tons of new capacity is planned to add in the market till 2014. PTA ushered in the expansion climax in 2012, 2013 and 2014, and the production capacity will soon break the mark of 40 million tons, which almost doubled and China truly becomes the great nation of PTA industry. On one hand, it enhanced the ability of self-sufficiency; on the other hand, the production capacity transferred into surplus from the shortage. The competition in the industry will be more intense. The future PTA industry will survive with small profits and be affected by external factors.
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Editor: sunny From: 168Tex.com
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