Polyester feedstock prices are now rising across the board, due to higher raw material costs and tighter supply in Asia and elsewhere. Polyester producers in China are now forced raising prices while reducing production at the same time. Oil prices could jump to US$100 in the event of a major supply disruption, this weekend said Goldman Sachs.
China's polyester producers began Monday raising their prices as raw material costs are again rising in Asia.
Prices of polyester staple fibers were up 100 yuan in several markets, as a result.
Textile producers will not easily accept such a rise in their material costs, as demand from downstream processors is relatively weak in this period of the year.
Costs are surging
The whole polyester pipeline is actually confronted with a surge in costs.
With oil prices staying above US$70 per barrel, MX prices reached record levels in the past week in Europe.
This is mainly due to higher demand from paraxylene producers.
MX or mixed xylenes are used for making PX or paraxylene that is itself used for producing PTA or Purified Terephthalic Acid, one of the two main components of polyester.
In the United States, PX prices last week rose US$45 per metric ton on spot markets to US$1,135 FOB USG for June deliveries.
In Europe, paraxylene rose to US$1,090-1,095 FOB Rotterdam.
In Asia, PX prices jumped to US$1,160 FOB South Korea for June deliveries.
Exxon Standard announced a contract price of US$1,120 for June, from US$1,060 in May.
PTA towards US$880
June prices could more generally be settled at US$1,080, therefore boosting PTA prices to higher levels.
PTA already reached US$850 per metric ton (CIF China) and could jump to US$880-890 according to market analysts.
In China, largest PTA producer BP-Zhuhai sttled its May price at 8,450 yuan per ton, up 200 yuan from April.
This is the same story on the ethylene-glycol market.
Ethylene prices are less rapidly rising than paraxylene. Monoethylene glycol (MEG ) is however in tight supply after major producer SABIC reported a reduction in output, mainly due to a lack of ethylene at two production lines.
Ethyelene is used for making MEG that is the other component of polyester, along with PTA.
In Indonesia, GT Petrochem may shut down a production line of 96,000 tons per year after costs surged and margins were eroded, as a result.
Higher energy prices
Crude oil futures are not expected declining, in addition.
A study by Goldman Sachs said that they could reach US$100 in the event of a major supply disruption.
Experts that Saturday met in Kuwait agreed that energy prices may further rise in the future.
