Polyester chain witnessed another bout of cost-push price advances

The polyester chain witnessed another bout of price advances in the week ended 24 April, with polyester staple fibre and filament yarn prices zooming past or almost at par with its previous high seen in the last week of November 2014. This time prices the push came from the demand side rather than cost side. Also helping came from the rounds of maintenance shutdown in the upstream industry. Added to these factors was a couple of fire breakout at petrochemical plants in China that feed the polyester industry.

During the week, polyester fibre makers in China hiked prices up US cents 8 a kg reflecting the firming upstream PTA and MEG markets. However, buying sentiment stepped back from last week as traders and yarn makers were cautious in chasing after higher prices, brushing aside their modest short-coverings. Inventory at producers mounted up a bit, with average run rates of PSF plants at around 65%. In India, producers held stable offers amid limited enquiries as downstream have stocked up raw material while in Pakistan, prices were basically stable and transactions followed up marginally.

Filament yarn producers also raised offers amid bullish sentiment as traders, holding cautious outlook, avoided purchasing in large volumes. In Jiangsu, PFY offers were largely up on back of tightening supply and steady demand. DTY prices were also hiked amid modest trading, and inventory at producers decreased a little. In India, POY prices were unchanged amid modest trading as producers were producing for their own use. In Pakistan, DTY prices were stable amid modest trading. Downstream buying was mainly on rigid demand.

1.4D direct-melt spun PSF prices jumped US cents 7-8 to US$1.31-1.34 a kg in Jiangsu and Zhejiang, while the same in Fujian was pegged in the range of US$1.31-1.33 a kg, up US cents 9 from last week recording highest increase among regions while Shandong saw prices rise US cents 4-6 to US$1.31-1.34 a kg. In Pakistan, prices in Karachi were steady at US$1.20-1.23 a kg while Indian PSF prices were down US cents 3 to US$1.25 a kg due to weak INR. In China, POY 75/72 was pegged at US$1.57-1.58 a kg in Shengze market, up US cents 13 from last week while 75/36 was up US cents 18 at US$1.62-1.63 a kg. In Indian POY 130/34 prices were at US$1.45-1.47 a kg, down US cents 2 due to weak INR.

In the upstream, Asian ethylene prices rose for the twelfth consecutive week led by South East Asia where spot supply was tighter compared with Northeast Asia. European ethylene prices too rose on tight supply due to some production issues combined with strong downstream demand. Paraxylene supplies continued to remain tight in Asian spot markets supporting prices to firm up again. MEG prices surged 8.7% in Asian markets on bullish futures and plants explosion in China. A blast at Sinopec Yangzi Petrochemical’s 300 kilo ton MEG unit tightened supply of MEG and ethylene oxide. European MEG prices also jumped following plant outage in Asia hitting a two and half year high. PTA prices jumped in Asia on bullish futures and by an explosion at Sinopec’s Nanjing Yangzi Petrochemical olefins plant, which forced shutting down of 600,000 ton a year PTA facility at Jiangsu, Nanjing. With raw materials, PTA and MEG prices going strong and approaching month-end replenishment, polyester chip markets got strong cost support to raise prices.

In the same week, oil markets were diverged with European Brent hitting 4-1/2-month highs on continued fighting in Yemen while US crude fell on concerns of another upcoming stock build, though both benchmarks registered weekly gains. Meanwhile, softer US$ lent support to Brent and formed a floor beneath falling US crude prices. Worries that crude stockpiles in the US could hit a new record next week weighed on US crude, even as overall demand for oil and fuel products, especially gasoline, picked up ahead of the peak summer driving season. Brent settled at US$65.28 a barrel finishing up for a third straight week, gaining 3% on the week. US crude closed at US$57.15 rising for a sixth straight week, up 2.5% on the week.

Courtesy: Weekly PriceWatch Report