End Demand On the Wane PTA Future Prospect Weak Situation Will Continue
Author: May 12, 2011 11:50
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Currently, the main reason of PTA pressure is for the weak PX cost support. Downstream market lacks activeness. In addition, the new investment of PTA will further add the market supply pressure. Also the unfavorable textile exportation situation will lead PTA end demand shrank. In my opinion, PTA aftermarket will keep its weak situation.
1. Textile and garment exportation is worrying
Known as the barometer of China’s trade, the Canton fair was concluded on 5th May. According to the statistics, the export turnover of this fair is $36.86 billion, increased 5.8%. Counting on the unit price of the products exported has rose 5% to 10%, the actual order amount is not that optimistic. Moreover, influenced by the material price fluctuated greatly, RMB appreciation and other factors like that, enterprise accept orders prudently. According to survey, short term order proportion increased, middle and short term order occupies 90%, and long term order only occupies 10%. As the data indicates, the procurement amount was not lessened, but the general turnover is lessened. Pure cotton weaving products marketing is the worst, and the cheap chemical and mixed weaving products is relatively good, while the home fur weaving products was at worse. Reflected by the enterprises, the profit margin of fur weaving products is very small, and some even at loss situation. Generally speaking, textile and garments enterprises have small profit margin, management becomes more difficult and its industry reshuffle is inevitable.
2. Export Tax Rebate Rumor Make the Market in Panic
It was in March that the rumor of textile export tax rebate rate would lower down spread out. And it is said that garment, textile, and colored metal like Pb, Zn, Al and other related products that are high energy consumption, and industry belonging unclear. Till now, the rumor is not verified, but it caused some worry to the Canton Fair exhibitors. If textile and garment export tax rebate rate lowered 5%, a great many of small textile export oriented enterprise will be out, which will undoubtedly inflict heavy loss on the exportation of the textile industry.
3. Increase supply will aggravate market pressure
See from downstream demand, the loom operation rate in Jiangsu and Zhejiang province has reached 74%, slightly lower than last year synchronically, while recently the turn over of textile in light textile region is over 7000 thousand meters, far more than the corresponding time last year. As the data shows, the end demand is OK, but the market trade atmosphere is not lively for the main reason is the speculation need is not strong, especially when the price at high, traders’ activeness in market participation is beaten greatly. Now, for the unoptimistic exportation situation, adding up with the nationally load shedding program, textile and garment industry will be bonded, and its downstream market capacity is hard to enlarge greatly. While PTA new productivity planned to put into operation is mainly in the second half of the year. Therefore, before the demand increase greatly, PTA productivity increase will continue to boost the market pressure.
4. Exportation increase stably, domestic demand slowed down.
According to the import and export data of maritime customes admistration on 10th, China’s import and export amount in April is $299.95 billion, which increased 25.9% in compare with last year. Of which, export amount is $155.69 billion, increased 29.9%, refresh the previous peak of $154.12 billion in December last year, and import amount is $114.26 billion, increased 21.8%. The moth surplus is $11.43 billion. Of which, garment exportation $39.57 billion, increased 22.9%, textile exportation $28.93 billion, increased 34% and shoe exportation $11.9 billion, increased 22.9%. Counting on factors like RMB appreciation, labor cost and material cost increase, the international demand is still under gradually recovery. As for domestic demand slowed down, it was mainly resulted from the excess of April trade surplus than expected.
In a word, see from a long term, PTA aftermarket pressure will still exist for the unoptimistic end consumer demand. But, after a great fall in the previous period, contract 1109 hit the price bottom, 9400 contract has cost support. And recently it is necessary to take some technological adjustments. See from the performance of the first two days of this week, PTA futures price is hard to rebound. Domestic disc went up at high for the outer disc turns red at previous night. PTA performance is well, but its up room is not big and it is had to break through 10000 level.
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Editor: Candy From: 168Tex.com
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