Polyester chain prices have begun falling across the board in the last week in Asia, as PTA and PSF prices were eventually plunging on spot markets. Although margins have remained at high levels, operating rates could be lowered at PTA and polyester plants, as demand has sharply declined from downward textile producers expecting lower prices in the coming period.
Polyester chain prices have fallen across the board in the past seven days in the Far East, with polyester fiber prices experiencing a sharp decline this Monday in China.
PTA prices have dropped only 25$ per metric ton or 3% on the international market, however plunging by 635 yuan or 9.5% in China.
On the glycol market, prices have lost 34$ or 6.1% on the international market whereas dropping 175 yuan or 4% in China.
From their level four weeks ago, PTA and MEG prices have respectively declined 7.7% and 9.5% in yuan terms in China.
With the Chinese currency sharply falling, PTA and MEG have respectively lost 10.5% and 12.3%.
Polyester in free fall
The sudden decline of PTA prices in the last week in China has triggered a similar fall of polyester prices, as expected in our latest weekly report.
PTA producers had until now resisted any decline of their offers, whatever the sharp fall of their raw material costs.
Paraxylene prices have continued sliding in the last seven days, being down 5.3% over the week and 12.2% in the past four weeks.
Gross margins have again improved at PTA plants, although PTA prices have heavily declined.
PTA producers could therefore continue lowering their price offers without really reducing their margins which are at very high levels.
By contrast, margins have apparently reached very low levels at paraxylene plants, with the PX/Naphtha spread at a 10-year low (see below spread tables).
PX producers will inevitably lower their operating rates to limit production and support prices.
At the other side of the polyester chain, fiber producers have also begun cutting their rates, due to a sharp decline in demand.
With buyers anticipating a continuous fall of prices in the textile chain, business activity is being dramatically reduced.
Only a stabilization of PTA and polyester prices could result in a rebound of demand in the coming days.