SINGAPORE (ICIS)–Spot purified terephthalic acid (PTA) prices in Asia have been rising on the back of tight supply amid unplanned outages at regional plants, despite weak demand from key China market.
Supply tightness may last well into June and provide firm support to regional PTA prices – which are currently at their highest since 2014 – while China’s domestic prices are under pressure from weak downstream polyester sales.
Regional prices have risen by 8.4% from end-March 2018 to $840/tonne CFR (cost & freight) China on 23 May, according to ICIS data.
China’s domestic PTA prices, on the other hand, started to decline on 16 May, shedding 2.0% to yuan (CNY) 5,763/tonne ($902/tonne) ex-warehouse on 23 May, according to ICIS data.
Amid the wide price gap between China’s import and domestic PTA market, Chinese buyers are focusing on procuring supply from the local market.
China’s monthly PTA imports are pegged at around 60,000 tonnes, which represent about 2% of its total consumption.
Amid scarce availability of supply due to plant outages, regional producers are opting to sell to other markets where prices are higher.
In South Korea, Hanwha General Chemical declared a force majeure on 21 May on supply following an unexpected shutdown at its Daesan-based 700,000 tonne/year PTA unit.
“Production of PTA units at southeast Asia were also riddled with small troubles, and this had led to better demand for imports seen from Malaysia and Indonesia,” a northeast Asia-based producer said.
There were healthy inquiries coming from Turkey and Europe, largely due to tight supply in the European markets, according to market players.
BP Chemical on 15 April declared a force majeure at its Belgium PTA unit, and declared a second force majeure on 17 May.
Apart from tight supply, PTA’s recent price rally in Asia was also driven by gains in the feedstock paraxylene (PX) market, coupled with the traditional peak demand season in April and May.
In China, downstream demand for PTA will enter into a traditional seasonal lull in June which will last into August, with buyers currently purchasing on a need-to basis, unwilling to build inventories.
Focus article by Samuel Wong
($1 = CNY6.39)
Photo: A worker at a textile factory in Jiangyin, east China’s Jiangsu Province. The textile industry is the main downstream of purified terephthalic acid (PTA). (Source: Sipa Asia/REX/Shutterstock)