PTA Impasse is Hard to Break
Author: Mar 11, 2011 12:56
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Currently, price of crude oil increases over 100CNY, PX price stays high; such high cost boosted the PTA market, yet due to the domestic government pressure and the slack perform of the downstream manufacturers, price increase becomes impossible. In March, many of the raw material manufacturers carry out PTA checking and repairing activities, which make the intense prompt goods supply even intense. And due to the high cost of labor force and material force, some downstream enterprises has not fully started operation, in addition, the lacking of purchase order make the PTA industry chain even slack.
Currently, PTA prices are still faced with many factors of uncertainty. Firstly, due to the price change of crude oil. Geopolitical factors have led oil prices stay high. Although it forms a cost supporting of PTA, it may trigger inflation, thereby increasing the intensity of state regulation. Secondly, it’s the change of demand. Affected by the appreciation of RMB, the export costs increases, which in return affected the export demand. However, domestically, the growth of economic and the inflation pressure are reverse to each other. The micro-control intensifies and post euro zone interest rate increases contribute a double pressure on PTA price. Taking the former sharp price increase into account, and the down stream manufacturers slack, the PTA price will still keeps its oscillation price adjustment.
Since this week, with the Middle East situation becomes clearer, the support of geopolitical factors weakens. In the prophase, the crude oil price increases sharply, which is over $100/barrel. Such a high price will probably threaten the revival of global economy. The crude oil price will be down in the following days. But, the response of crude oil price of the relevant suppliers will take a while. Moreover, the US gasoline consumption is expected to rise with the temperature goes up. U.S. oil inventory changes, U.S. economic data and the main monetary policy impact little on the existing market. It may only cause short-term slide of the petroleum. WTI crude oil is expected to call back in March and the bottom line will not be lower than $90/ barrel.
The PX markets in Asia show the trend of price increase. On one hand, Asian products are pouring to the European and American area, making Asian supply even tough. And presently, the profits margin of PTA for the domestic demand is still large; therefore, PTA production units still maintain a high load operation. On the other hand, PX contracts price is advocated in March, if contracts are settled at high prices in March, it will support for the spot market. On sales contract aspect, ExxonMobil Asia PX quotes CFR price $1750/t, Japan IDEMITSU quotes CFR price $1730/t, and Xin Rishi quotes CFR price $1730/t.
 Now，PTA spot market slack, the price is shallow oscillated. Affected by the downstream rework factor, material stocking has not timely followed up. The purchase orders of last year were closed and high-priced material is hard to sell. Thus, the down stream market can not withstand the expensive PTA. With the influence of inflation, downstream PTA market is not able to be fully started on time. Now the interior quotation increase to 11500-11600CNY/t.On the exterior quotation, the Asian PTA spot stocks price still shows a low priced graph. Sellers’ quote is around $1485/t, and the strike price is $1490/t.
In downstream production and marketing, PET chips markets maintain its original price, turnover is not big, yet for the downstream tardy start of working, the product is not able to sell effectively. PET chips spot goods turnover is not optimistic. Now, the semi-dull mainstream price is quoted at 13900-14000CNY/t, strike price is around 13650-14000CNY/t. Bright mainstream price is quoted at 13700-13900CNY/t, strike price is around 13600-13900CNY/t. In addition, Polyester staple fiber price in Eastern China is in its sideway state. Market quotation maintains the same. And the turnovers are still not big. Currently, polyester staple fiber production and marketing efficiency is not high, and the pressure of stock comes to appear.
Polyester filament price rebounded, quotation increased to 100CNY. The down stream manufacturers pick up orders slowly. But for the shortage of labor force, operation rate is not able to increase substantially. Recently polyester markets see in the wavelet purchases, production-and-marketing rate has gone up to some degree, but stock pressure is also one of the major reasons of market swings. Polyester filament price is influenced by the upstream PTA spot goods market price. However, after quoting for the increase price, there is a dull reaction from the downstream market, thus the demand for polyester filament calms down. Recently, polyester filament manufacturers stop to check and repair equipment one by one, thus the production load shows a falling trend. As for the downstream market, weaving enterprises come to a normal operating rate. The demand for Polyester fiber recovered, and for the small amount of stock, the turnover of polyester has not fully recovered.
As for stock, presently, PTA assistant 1105 contract continue its falling trend below 12000. Although crude oil price increases, and the stock market rise sharply, stock products price is hardly to rise. The current market is in its balanced environment. PTA price increases by 30% from December 2010 to Mid-February this year, it need an adjustment and digest period. Meanwhile, from the recent PTA and crude oil correlation, the short-term correlation is not close, and the price transmission is not smooth. PTA increase in the prophase has exceeded its normal level. Therefore, no matter now sharp increase of the crude oil price, it creates little influence to the PTA market. But, the high priced crude oil restricted the decrease of PTA price. On one hand, the increased upstream material cost forms a support to the PTA price, on the other hand, PTA manufacturers stops to repair its machinery, coping with the over high price of crude oil. Now, the PTA production costs remained at 9800 CNY/ t per line. Profit margin is still big. From the Long-term perspective, for the different pace of PX, PTA and polyester production, PTA process is under an intense mode. Under such a positive situation, the short-term adjustment will not change the long-term upward trend of PTA price. On market operation, I believe the recent PTA Impasse is hard to break.
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Editor: Candy From: 168Tex.com
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