China’s Sep-Jan PTA futures flip to backwardation amid plant shutdowns, low stocks – China Sep Jan PTA
China’s Sep-Jan PTA futures flip to backwardation amid plant shutdowns, low stocks
The market structure in China’s much-watched purified terephthalic acid futures on the Zhengzhou Commodity Exchange flipped to a highly unusual backwardation for September to January over the last week, caused in part by PTA plant shutdowns and tight spot supply, market sources said Friday.
“I have never seen that before,” an experienced PTA producer said about the backwardated structure in the PTA futures market, adding that PTA inventories among Chinese producers are currently low.
On the bright side, the entire chain of products from paraxylene via PTA to polyester is now making money, he explained.
As of 11:30 am Singapore time (0330 GMT) Friday, September PTA futures were trading at Yuan 5,338/mt, while January futures were at Yuan 5,124/mt, Zhengzhou Commodity Exchange website showed.
PTA prices were assessed at $628/mt CFR China on Thursday, up $11/mt week on week. CFR China discussions were heard at $640-$645/mt Friday morning.
The extended shutdown of major Chinese PTA producer Hengli Petrochemical’s 2.2 million mt/year No. 1 PTA line at Dalian until mid-August took the market by surprise this week and exacerbated an already tight inventory situation among China’s PTA producers, another producer said.
The extended shutdown at Hengli was confirmed by a company source, who explained that there was a technical issue related to the plant’s crystallizer.
The plant was shut on June 23. Adding to this, China Prosperity Jiangyin Petrochemical — also known as Hanbang Petrochemical — has yet to restart its 2.2 million mt/year PTA plant in Jiangyin from a maintenance originally scheduled over June 21-July 5, according to a source.
The restart date is still uncertain, but “hopefully soon,” the source added.
Further out, Huabin is expected to restart its idled 1.4 million mt/year PTA plant at Zhejiang, likely in the fourth quarter of this year, a separate PTA producer said.
Also China’s Jiaxing Petrochemical aims to start up its new 2.2 million mt/year PTA plant at Zhapu, Zhejiang province, in October, S&P Global Platts reported earlier this week, meaning more supply is expected in the PTA market in the fourth quarter.
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