When Will PTA Price Stop Falling?
In a month time, PTA price dropped about a thousand Chinese Yuan. PTA futures price has dropped below 9000CNY, kicking the bottom of the year and spot goods price went down to 9050CNY. Taiwan ship loaded cargo price dropped to $1150, Korean goods price has also kicked the bottom at $1140. Now the overall PTA industry chain is weak. The previous bottom has been broken through, now again it went into a glide path. Businessmen are wondering when will be the end of the falling.
1. Crude oil price slumped, inhibits PTA price up
For the last few days, crude oil price dropped greatly. New York crude oil price come back to the base line of $90 while London crude oil price come to the base line of $100, which is the price level in the mid term of February. The main reason for the price dropping is that, on 23rd June, the IEA claim to release 60 million barrel crude oil, in order to curb the oil price, boosting the world economy recovery trend, aiming to cover the shortage gap that result from the supply of Libya to China. See from the economic data that America released recently, the growth speed of American economy slowed down. The job market is depressed. House sale in June dropped 2.1%, comparing with that of the previous month, the year out of house sale is 319 thousand sets. Meanwhile, the U.S. labor department data showed on June 18th, the unemployment people increased 9000 thousand people to 429 thousand people, which is 415 thousand over the estimated data. American gas price increased 40%. Such a high oil price seriously hampered the recovery of U.S and its monetary expansion. Therefore, businessmen are mostly keeping a wait and see attitude towards aftermarket oil price. There is a positive correlation of the nature of crude oil prices and PTA price. The crude oil price going down will inevitably suppress the PTA price.
2. PX price drop all the way, PTA price follows downward.
PX as the direct upstream material, PX price will directly influence PTA price. Recently, with the price falling of bulk goods, PX price goes down all the way and the profit margin is shrunk. By 28th, June, Asian PX price dropped to $1378/t, FOB Korea. European PX price was $1430, FOB Rotterdam. The price difference of PX and PTA was $243, and the price difference of PX and naphtha was $499. Currently there is still $200 profit margin; therefore, Asian PX plants operation rate is high. PX supply is at its peak for the production expansion and new production investment.
Calculate from the PX price $1400, currently the production cost of PTA is at about 8200CNY/t. With PX price goes down, PTA price will reduced to 7500CNY, thus high profit enterprise will mark its PTA price down.
3. Slack season comes, demand weakened.
With the coming of slack season, demand shrunk, polyester products price and sales volume went down simultaneously. The overall production and marketing rate is low under the influence of tight capital, and financing difficulty. And with a series of tightening policy, poly plants cost increased, which curbed its sales volume. Now the turn over on the market is apparently downward. Production and consumption rate in the plants dropped back to 60% to 80%. PTA demand is shrunk by the slack market.
Recently, Poly fiber price was marked down generally by 100-200CNY. Poly staple fiber price also dropped from 13300CNY to 12800CNY. Poly bottle chips price went down to 12200CNY or so.
To sum up, crude oil and PX price slumped, which inhibited PTA production cost. Also PTA supply suffered from a big pressure. In the near future, PTA oversupply will be aggravated. Adding up with cotton price slump, unfavorable factors have become predominant, PTA price falling will go on, but when will be its end? In my opinion, the bottom price will around 8500CNY.
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