PTA prices have sharply rebounded this Monday in China, as a series of planned overhauls should result in lower production levels in the coming weeks. The chemical industry is also experiencing technical and safety issues in the current period which could trigger a massive relocation of capacities far from urban areas, with costs and prices therefore rising over the long run.
Polyester intermediate prices have risen this Monday in the Far East, due to anticipations of tighter supply in the short and the long term.
PTA prices have gained 290 yuan per metric ton in a single day in China, or 4.5% whereas MEG prices were only up 40 yuan.
The recovery of PTA prices may be explained by a similar surge of PTA futures in Zhengzhou, with the nearby contract rising 266 yuan on Monday, or 4%.
Raw material costs of PTA producers have suddenly jumped in the past days, with paraxylene rising to 1,030$ at the end of last week, before further increasing on Monday.
Crude oil prices have sharply risen, with New York’s WTI up 2.8% in the last seven days, therefore gaining 11.5% in four weeks.
Mixed xylene prices have increased by 8.7% in the meantime, but paraxylene has declined 6.3% in four weeks over excess supply.
A series of paraxylene plants will now be shut down for maintenance operations which could support prices in the second part of April.
With PTA prices rising, margins have continued improving at PTA plants.
The PX vs PTA spread has fallen 25% in four weeks.
PTA prices should stay very firm in the coming period, due to planned overhauls.
A recent series of deadly accidents at chemical plants in China has triggered a sharp reaction from authorities.
Safety inspection plans could result in lower production levels than earlier expected, therefore supporting prices.
Over the longer term, large capacities could be closed in order to protect urban areas with plants being relocated to safer locations.
Such a radical move would mean higher costs and also higher prices for the polyester industry, especially in Jiangsu and Zhejiang.
Source: Emergingtextiles
