SINGAPORE--A $90/tonne crash in paraxylene (PX) spot values this week has seen downstream purified terephthalic acid (PTA) and polyester prices plummet with a further drop anticipated soon, said buyers and sellers on Thursday.
A sharp decline in crude oil and naphtha prices saw PX tumble to this week s $1,540-1,550/tonne CFR (cost and freight) Taiwan, from last week s $1,630-1,640/tonne.
Prices were at $1,650-1,655/tonne CFR Taiwan earlier in the month.
"The crash was somewhat unexpected, as we thought some suppliers who were short would come into the market and buy up some cargoes, supporting prices above [$1,650/tonne] indirectly," said a South Korean broker.
There were several PX outages over the past month, and at least two producers had bought spot cargoes in the past few weeks to plug contractual shortfalls.
But the steep drop in crude oil prices "changed all these", said a veteran trader from an international trading firm based in Singapore.
However, market participants blamed other factors for the PX price dip as well.
"The downstream sector was performing poorly, and since last Monday, we saw some end-users actually selling a part of their PX inventories in the spot market," said a Japanese trader.
While no end-user would go on record, a check with 11 of them showed that at least three had sold PX in the past two weeks and more than half of them would do the same "if the conditions are right", said a major PTA maker in Taiwan.
The rest of the end-users admitted that they had asked their suppliers to delay the shipment of part of their contract volumes. This prompted at least one leading trader to dump some of these rejected cargoes in the spot market.
The sudden glut of PX in the market, a direct consequence of PTA shutdowns on poor economics, had come as a surprise to most players, as it was only about three weeks ago that PX outages had forced some of suppliers to buy spot.
"We were actually hoping that PX would at least remain firm or stable above [$1,650/tonne] and that can support PTA and polyester prices," said an official from Hangzhou Top Polyester, a filament yarn producer.
But the PX sell-off started last Wednesday and by the end of last week, "all hopes for PTA hitting $1,200/tonne [CFR China] and above were dashed," said a trader with Future Petrochemical.
"Actually, my buyers wanted the PTA and we were almost succeeding to agree on a $1,200/tonne price for July, but now all that is no longer possible," said a trading house that deals with Japanese and Thai PTA exports to China.
Polyester producers agreed that the PX retreat had caught them by surprise too, and "now we need to re-do our sums and not assume that the upstream sectors could continue to push the downstream to accept higher prices," said an official from Xiang Sheng Polyester, a filament and fibre chip producer in Xiaoshan in China.
The PX slippage has so far dragged PTA prices down to $1,140-1,150/tonne CFR China from $1,180-1,190/tonne over the past two weeks, while prices of filament yarns, polyester staple fibre and fibre chips have either fallen or stopped rising.
Partially oriented yarn prices have fallen from late-June s CNY12,350/tonne ($1,808/tonne) ex-works to this week s CNY12,050/tonne, while commodity-grade polyester staple fibre had stalled at CNY11,925/tonne ex-works during the same period.
By late June, semi-dull fibre chip had risen to CNY11,350/tonne ex-works from CNY11,150/tonne around mid-June, but the uptick fizzled out last week and prices were currently at CNY11,250/tonne.
Some market observers also agreed that poor downstream conditions had indirectly brought about the price downtrend.
"This year, China s textile industry is simply not doing well, and all of us in the business can see that sales aren t as good as previous years," said a trader from Sinochem International in Shanghai.
Without downstream support, PX, PTA and polyester prices could not move up much, said buyers and sellers. "So the price [bullishness] we saw in the first half of this year was very much due to the crude oil factor, the upstream push," said a Shanghai-based trader from C & J Trading.
"Now, without the support from both the downstream and upstream sectors, and going into the seasonal lull in the textile industry, we expect prices to fall further," said an official from Rong Sheng Polyester, a leading producer of filament yarns in Xiaoshan.
A sharp decline in crude oil and naphtha prices saw PX tumble to this week s $1,540-1,550/tonne CFR (cost and freight) Taiwan, from last week s $1,630-1,640/tonne.
Prices were at $1,650-1,655/tonne CFR Taiwan earlier in the month.
"The crash was somewhat unexpected, as we thought some suppliers who were short would come into the market and buy up some cargoes, supporting prices above [$1,650/tonne] indirectly," said a South Korean broker.
There were several PX outages over the past month, and at least two producers had bought spot cargoes in the past few weeks to plug contractual shortfalls.
But the steep drop in crude oil prices "changed all these", said a veteran trader from an international trading firm based in Singapore.
However, market participants blamed other factors for the PX price dip as well.
"The downstream sector was performing poorly, and since last Monday, we saw some end-users actually selling a part of their PX inventories in the spot market," said a Japanese trader.
While no end-user would go on record, a check with 11 of them showed that at least three had sold PX in the past two weeks and more than half of them would do the same "if the conditions are right", said a major PTA maker in Taiwan.
The rest of the end-users admitted that they had asked their suppliers to delay the shipment of part of their contract volumes. This prompted at least one leading trader to dump some of these rejected cargoes in the spot market.
The sudden glut of PX in the market, a direct consequence of PTA shutdowns on poor economics, had come as a surprise to most players, as it was only about three weeks ago that PX outages had forced some of suppliers to buy spot.
"We were actually hoping that PX would at least remain firm or stable above [$1,650/tonne] and that can support PTA and polyester prices," said an official from Hangzhou Top Polyester, a filament yarn producer.
But the PX sell-off started last Wednesday and by the end of last week, "all hopes for PTA hitting $1,200/tonne [CFR China] and above were dashed," said a trader with Future Petrochemical.
"Actually, my buyers wanted the PTA and we were almost succeeding to agree on a $1,200/tonne price for July, but now all that is no longer possible," said a trading house that deals with Japanese and Thai PTA exports to China.
Polyester producers agreed that the PX retreat had caught them by surprise too, and "now we need to re-do our sums and not assume that the upstream sectors could continue to push the downstream to accept higher prices," said an official from Xiang Sheng Polyester, a filament and fibre chip producer in Xiaoshan in China.
The PX slippage has so far dragged PTA prices down to $1,140-1,150/tonne CFR China from $1,180-1,190/tonne over the past two weeks, while prices of filament yarns, polyester staple fibre and fibre chips have either fallen or stopped rising.
Partially oriented yarn prices have fallen from late-June s CNY12,350/tonne ($1,808/tonne) ex-works to this week s CNY12,050/tonne, while commodity-grade polyester staple fibre had stalled at CNY11,925/tonne ex-works during the same period.
By late June, semi-dull fibre chip had risen to CNY11,350/tonne ex-works from CNY11,150/tonne around mid-June, but the uptick fizzled out last week and prices were currently at CNY11,250/tonne.
Some market observers also agreed that poor downstream conditions had indirectly brought about the price downtrend.
"This year, China s textile industry is simply not doing well, and all of us in the business can see that sales aren t as good as previous years," said a trader from Sinochem International in Shanghai.
Without downstream support, PX, PTA and polyester prices could not move up much, said buyers and sellers. "So the price [bullishness] we saw in the first half of this year was very much due to the crude oil factor, the upstream push," said a Shanghai-based trader from C & J Trading.
"Now, without the support from both the downstream and upstream sectors, and going into the seasonal lull in the textile industry, we expect prices to fall further," said an official from Rong Sheng Polyester, a leading producer of filament yarns in Xiaoshan.
