Polyester Prices Fluctuating Owing To Crude And Plant Shutdowns

Market Intelligence

Polyester Prices Fluctuating Owing To Crude And Plant Shutdowns

PTA

The first half of August witnessed a mix price trend for PTA. Commodity prices witnessed an upward movement at the beginning of the month but receded later. The initial upward movement was backed by northward moving crude oil prices and maintenance shutdown of few PTA plants. Benchmark Brent index crossed the US$ 50 a barrel mark in the beginning of the August and is now comfortably hovering around US$ 52 per barrel. So, spot PTA goods are quoted higher but the downstream demand scenario is not supporting higher prices. However, the plants will resume production within next fortnight and this might ease the supply situation. Therefore, buyers should be cautious and not panic. Current spot market offer prices for PTA are around US$ 650-685 per metric ton CFR CMP while traded prices are around US$ 640 per metric ton or marginally higher. Outlook for PTA prices indicates a fluctuating price trend in the coming fortnight and may soften towards the month end.

MEG

MEG prices showed a fluctuating trend during first half of August as prices went up and then fell moderately as availability of goods improved. However, in spite of the fluctuations, MEG prices gained compared to end of July price level. The demand for MEG has been somewhat slack as the downstream polyester sector seems to be reducing its operating rate. Also, a few MEG plants have been restarted after maintenance shut-downs and Reliance Industries has also started its new 750 kilo ton MEG plant which is expected to supply on-spec goods from second half of August. Thus, supply of the commodity is in abundance and this may have negative impact on prices. Current spot offer prices of MEG are around US$ 865-875 per MT CFR China and traded prices are around US$ 860-865 per metric ton. MEG prices are expected to exhibit a fluctuating trend in the coming weeks and might soften.

PET Chips

PET chips prices witnessed marginal upward trend as raw material prices changed during the first half of August. Prices of PTA have improved during the fortnight which helped average traded price of PET chips as well. The demand for PET chips looks healthy which also supported prices. Current Water Bottle Grade PET chips offer prices are around US$ 985-990 per MT FOB China while deals were done around US$ 970 - 980 per MT FOB China. Fibre grade chips quoted prices are around US$ 935-945 per MT FOB Korea. Polyester chips prices are expected to remain stable in the coming weeks.

PSF

PSF prices witnessed nearly stable trend during August first half while raw material prices witnessed marginal upward trend. The upward movement in the average traded price of PTA has provided some cost support to fibre producers but demand for PSF has not been strong enough to see a price hike at this moment. Also, inventory levels have grown sizably while few players have cut plant operating rates. So, prices of fibre expected to soften if inventory level grows further. In Chinese local markets, trading activities for PSF dwindled during the fortnight while inventory levels have grown too. There are chances of price discounts to get rid of the inventory. In Indian local markets, PSF prices remained stable but demand has come down. Buying of fibre is need based, as many downstream weaving/ knitting mills are operating at a lower capacity. Current offered price for 1.4 denier raw white semi-dull PSF is around US$ 1.05- 1.09 FOB China/Taiwan. CNF India prices are around US$ 1.10-1.13 per kg.

Prices of PSF are expected to witness minor corrections in the coming weeks.

PFY

Polyester Filament Yarn (PFY) prices witnessed a sizable correction during August first half in spite of stronger PTA prices. Increased crude oil and PTA price failed to provide the required support to yarn prices as demand dwindled during the fortnight. On the other hand, it seems that inventory level is growing with the producers who have not cut production rates. Price corrections were witnessed across all types of polyester filament yarns during the first half of August but the rate of price decline in FDY has been steep. This is exactly opposite of the trend that was observed in July. It is expected that polyester filament yarn (PFY) prices might witness further correction in spite of strong raw material prices if demand does not improve from the current level. Prices of PFY in Chinese local markets have decreased during the last fortnight and stock levels are growing. In the Indian market, demand for polyester yarn continues to be weak which has been attributed to downstream plant closures due to implementation of new tax regime (GST). Current quoted price for 115D/36F POY is US$ 1.03-1.04/kg FOB China/Taiwan, 150D/48F POY price is US$ 0.95-0.96/kg FOB, whereas 75D/36F DTY price decreased to US$ 1.44-1.46/kg and 75D/72F FDY price decreased to US$ 1.15-1.16/kg FOB China/Taiwan. PFY market forecast indicates that yarn prices would witness weaker trend if raw material price does not change in the coming weeks.