Polyester fiber prices are now falling over a weakness in demand, and although PTA prices have been kept unchanged. MEG prices are however further plunging, therefore offering room for lower polyester prices.
Paraxylene and MEG prices have continued last week falling in the Far East, triggering anticipations of lower polyester prices in the coming period.
As a result, polyester filament prices have begun plunging in China, ahead of May Day holidays.
End of the crude oil rally
Crude oil prices have stopped rallying, with New York futures and Brent indicator rapidly returning to lower levels.
Compared with a week earlier, the WTI has lost 2.9$ per barrel or 4.3%.
Paraxylene prices have continued falling in the meantime with FOB Korea down 15$ per metric ton or 1.6%.
In four weeks, spot PX prices have lost nearly 10%.
Gross margins have dramatically fallen at paraxylene plants in the meantime, as naphtha prices were moving into the opposite direction.
From 464$ per MT, the PX vs naphtha spread has declined to only 324$, losing 31% in only four weeks.
No PX ACP price in May
As a result, major paraxylene producers have been unable to find an agreement with the largest PTA producers in Asia for settling May ACPs.
Offers have been made at $1,100 to $1,140$ whereas bids were below 1,000$.
With uncertainties prevailing and margins plunging, paraxylene producers may be expected lowering their operating rates.
Japan’s JXTG already intends to cut by 10% to 20% its output.
PTA prices not yet falling
Until now, PTA producers have ignored the fall of their raw material costs and their margins have surged as the PX vs PTA spread was falling more than 50% in four weeks only.
Although they have ample room for lowering their prices, PTA sellers have kept them unchanged until now.
Downward polyester filament producers have been forced to cut their offers by contrast, meaning their margins will sharply drop.
The fall of MEG prices is however limiting the decline in margins at fiber plants.
Glycol prices have continued tumbling in the last seven days, therefore reaching historically low levels.
MEG accounts for one-third of total material costs of polyester producers with PTA accounting for the remaining two-thirds.
Fiber producers have benefited from large margins in the past months and could accept a decline of their prices rather than cutting their production levels.
As a consequence, demand for PTA will stay strong and PTA prices could resist any decline, amid a series of overhauls limiting production in Asia.
Source: Emergingtextiles
