Asian purified terephthalic acid and mono ethylene glycol prices, both raw materials for making polyester, have started roaring their heads once again after hovering below US$950 a ton mark since late March. This time, while the market is yet to see buoyancy, producersâ€™ move to cut operating rate to support prices have come to play.
During the last four weeks PTA prices have surged US$93 a ton while MEG have gained US$79 a ton. The latter has derived strength from rising PTA Futures in China, where production cuts implemented by major PTA producers influenced PTA futures to surge on the Zhengzhou Commodities Exchange.
In the week ended 6 June, Asian MEG price was assessed at US$964 a ton CFR China and US$967 a ton CFR Southeast Asia. Meanwhile PTA prices surged US$40 a ton during the week to be assessed at US$945 a ton CFR China and US$951 a ton FOB Korea. PTA markets were also supported by the US$100 a ton jump (during last four weeks) in paraxylene spot prices in absence of Asian Contract Price settlement since February this year. For MEG, cost eased as ethylene prices were down US$25 during the same period.
Downstream polyester makers were jammed between rising cost and lagging demand from end-users. However, they could push offers up to cover cost but actual transactions remain below the offer line, thus squeezing margins dramatically.
Offer for PSF were hiked US cents 11 per kg and that of POY by US cents 8 a kg. However, buying interest was seen increasing in the week ended 6 June, lifting prices. PFY prices surged on support of firming raw materials and increased buying interest while PSF saw increased trading and prices surging on cost support. The markets gained momentum, tracking rapidly increasing cost.
Courtesy: YnFx Weekly PriceWatch Report and YnFx Daily Textiles Prices
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