Polyester intermediate prices could now drop in Asia, over a lack of demand from polyester fiber producers. With margins plunging at PTA and MEG plants however, operating rates may be expected falling in the Far East, therefore offering some support to material costs of polyester producers.
Crude oil prices have continued rallying in the past days, thanks to a series of production cuts by OPEC+ countries, especially Saudi Arabia.
New York’s WTI has gained 2% in the 7-day period to this Monday, being up 10.4% in four weeks.
The market usually expects a strong contraction sooner or later after new pipelines in the United States will help supplying higher quantities of US shale gas production.
Crude oil rally could rapidly lack steam
With the global economic slowdown lowering demand for crude oil in addition, a return back to lower price levels would not be surprising.
Paraxylene prices have continued following the same trend in the last week, with spot prices rising 11$ per metric ton or 1%.
PTA prices have not moved in the meantime, reflecting a lack of demand from polyester fiber producers, in addition to a rise of PTA production to pre-holiday levels in China.
Operating rates of the PTA industry in China have climbed to 81.9% whereas they have jumped from 76.5 to 82.4% at polyester fiber plants.
Lower PTA and MEG supplies in sight
With PSF prices now slightly declining, demand for PTA is not expected rebounding however, as fiber producers will keep their inventories as low as possible.
The PTA producers have not been able to raise their offers in line with the rebound of paraxylene prices in the past three months.
Their profit margins have melted, as a consequence, and a series of PTA plants are being shut down in the Far East.
As reflected by our below table, the PX/PTA spread has jumped 41% in three months.
The margins of MEG producers have also plunged in the past weeks, after ethylene prices have surged in Asia.
As a result, a few glycol plants will be shut down in March, which could limit the fall of prices.
Source: Emergingtextiles
