PTA Rebound will be Limited

    Influenced by the big drop of USA unemployment rate and the down regulation of deposit reserve ratio, the PTA price rebounded in ZCE on Monday. However, the big expansion production plan will compress PTA rebound space, and the point of 8500 Yuan will be an important pressure line which limits PTA rebound.

    Recently, the joint bailout of six global banks and the drop of deposit reserve ratio of People’s bank of China eased the tension of market mobility to some degrees and brought the short term favorable news to the commodity market. But so far, the Euro zone still deeply fell into the Europe debit crisis, although, German chancellor Angela Merkel promised to protect Euro on last Friday, she also warmed that it will be a long way for Europe rebuilding the confidence. In fact, the Europe debit crisis was caused by the consumption of some Europe countries surpassing the productivity development, and it was difficult to solve this problem fundamentally. 

    It is delighted that the USA economy recovered and eased the market fear of Europe crisis. The unemployment rate published on last Friday dropped to 8.6%, which was the lowest point since March, 2009. In addition, China suddenly dropped the deposit reserve ratio on last Monday, so the market estimated the money policy will turn loose. But, the performance of China economy was not good; CFLP published on Dec, 1st that PMI in Nov was 49.0%, which dropped 1.4% M-to-M. This is the first time the PMI dropped below 50% within 33 mouths since March, 2009. The HSBC PMI published on same day was only 47.7%, which dropped 3.4% compared to Oct, which was lowest within 32 mouths. Whatever, the drop of deposit reserve ratio gave terminal middle and small enterprises chance to breathe.  

 In short term, better macro aspect will be the main motive power for PTA rebounding. 
    Limit Production to Keep the Price

In late November, some PTA production enterprises prepared to stop producing so as to keep the price. In fact, these production enterprises conveyed the idea to market that PTA price will not drop immoderately though the PTA production capacity will increase in the future. Of course, the PX profit reduced continuously was also the reason for the increasing of PTA cost support. By the end of last weekend, the price difference between PX and MX dropped to 190 USD/Ton, and the price difference between PX and naphtha dropped to 470 USD/Ton, which dropped dramatically.  

    Although, the better macro aspect caused the PTA rebound, the big PTA expansion production plan will compress the PTA rebound space, in another word, the PTA rebound space can be regard as its profit space temporarily. 

    Influenced by the weak global economic situation and Europe debit crisis, the PTA demand was not high at all times. In terms of the situation of factories orders in autumn, orders of many middle and small factories dropped 40-50%. It is the slack season of PTA demand now, the drop of deposit reserve ratio may give PTA downstream factories the chance to breathe, but consumption slack season, Europe debit crisis and eased domestic economy will still limit PTA demand turn better. Meanwhile, since November, it is go against further PTA rebound that many polyester products price dropped even below the cost line.