Dip In Crude And Raw Material Prices Drive Polyester Pricing Downstream

Market Intelligence

Dip In Crude And Raw Material Prices Drive Polyester Pricing Downstream

Purified Terephthalic Acid (PTA)

PTA prices fluctuated within a narrow range during March first half. The sudden decline in crude oil prices had direct impact on PTA prices though cost support from PX helped the commodity to hold its ground and prices kept sliding slowly. The demand for PTA was healthy and traded volume of the commodity remained healthy as well. As the price declined, many buyers enquired about the product and brought sizable volumes. However, polyester sector inventory is growing which may slow down the demand in the coming weeks. Supply of PTA is adequate and inventory level is normal. Current spot market offer prices for PTA are around US$ 680-685 per metric ton CFR CMP but buying prices are around US$ 655-660 per metric ton. Outlook for PTA prices indicates towards a declining trend in the coming fortnight.

Monoethylene Glycol (MEG)

MEG prices witnessed substantial drop in the first half of March. Prices of the commodity declined as the crude oil prices witnessed sudden drop in the fortnight while few plant start-ups have ensured supply continuity. Also, downstream polyester sector's demand has not been good and inventory level is growing. So, MEG suppliers had no option but to revise prices. MEG prices started declining since the mid February which saw some reversal of the trend towards February end. However, March first half witnessed further decline in prices though there was resistance and even reversal of the downtrend towards mid- March. Current spot offer prices of MEG are around US$ 790-800 per MT CFR China and traded prices are around US$ 780-785 per metric ton. MEG prices are expected to exhibit a fluctuating trend in the coming weeks.

Polyester Chips (PET Chips)

PET chips market prices witnessed downward trend as raw material prices keep plummeting this fortnight. The demands for PET chips are passable while inventory levels are normal. However, as the prices of the commodity have come down buying volumes might improve in the coming fortnight. Current Water Bottle Grade PET chips offer prices are around US$ 980-1000 per MT FOB China while deals were done around US$ 970-980 per MT FOB China. Fiber grade chips quoted prices are around US$ 955-960 per MT FOB Korea. Chips prices are expected to move in line with raw material prices in the coming weeks.

Polyester Staple Fiber (PSF)

PSF prices witnessed a marginal downward correction in the first fortnight of March. Decline in the raw material prices compelled the fiber spinners to rationalize the price. However, fiber suppliers are strongly resisting as goods were produced with high cost raw material! In the last fortnight, both MEG and PTA have witnessed sizable price correction which has taken away the cost support to fiber manufacturers. Also, demand for the fiber has weakened gradually during the fortnight which would create additional pressure on fiber prices. Yarn spinners are asking for better fiber prices as spun yarn sector resisting high yarn price and demand has declined too. Therefore, traded volume of PSF has been low and in the coming weeks prices may come down further if there is no change in raw material prices. In Chinese local markets, trading activities for PSF were extremely dull as the prices have come down substantially in last one month. In Indian local markets, PSF prices have remained high and buying volumes dwindled. Current offered price for 1.4 denier raw white semi dull PSF is around US$ 1.03 - 1.05 FOB China/Taiwan. CNF India prices are around US$ 1.06 - 1.09 per kg. Prices of PSF are expected to witness some correction in the coming weeks.

POY, PTY & Flat Yarn

Polyester Filament Yarn prices witnessed downward correction during first half of March as well. The correction in the raw material prices - PTA and MEG has compelled the yarn suppliers to bring down the polyester filament yarn prices. Earlier, both the raw materials have witnessed substantial hike which lead to spike in the yarn price trend. However, as cost support has eased with the decline in raw material prices, filament yarn prices also followed the path. The price correction is more visible in POY and FDY while DTY prices also seen significant correction. Traded volume of polyester filament yarn has reduced due to higher prices during the fortnight but as prices have come down, there are expectations that demand would revive. Prices in Chinese local markets have come down while similar scenario was witnessed in India. Current quoted price for 115D/36F POY is US$ 1.03-1.04/kg FOB China/Taiwan, 150D/48F POY price is US$ 1.0-1.01/kg FOB, whereas 75D/36F DTY price is US$ 1.46-1.48/kg and 75D/72F FDY price is US$ 1.12 - 1.14/kg FOB China/Taiwan. PFY market forecast indicates that prices may witness declining trend in the coming weeks.