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Depressing PTA and MEG prices at the same time

Polyester prices declining in China

Polyester prices began clearly falling in China in the past seven days, mainly due to additional power shortages which further depressed a usually low demand in this period of the year. Raw material prices also declined in China and in other places in the Far East.

Polyester prices began sliding across the board in China in the past week. Average price of polyester staple fibers was about 10,450 yuan per ton in the East, down about 100 yuan. Prices were as low as 10,300 yuan per ton in certain places of the country.

Prices of 100% PSF yarn did not yet decline, however, although cotton yarn prices sharply fell in the past two weeks. The fall in cotton prices may negatively affect the level in PSF prices in the short term.

Cotton prices declined about 1,000 yuan per ton or 12 US cents per kilo in the past three weeks while PSF prices only decreased by 80 yuan or 1 cent at the same time. Price difference fell from about 6,000 yuan per ton down to 5,150 yuan per ton (74 cents to 63 cents per kilo), as a result.

Prices of polyester filament yarns also began falling in the past week with FDY down 200 yuan per ton (2 cents per kilo) while DTY declined 125 yuan per ton (2 cents per kilo).

There were were more power shortages, according to local sources in major weaving places. Certain factories would only run three days per week, as a consequence.

Other textile plants would have invested in generators but the additional cost resulted in lower profits or even in losses. As a result of a slowdown in demand from downward processors, stocks are being accumulated at PFY plants. With textile markets entering the off-season, demand and prices are not expected rebounding in the short term.

Prices of polyester raw materials are also declining in China as a result. PTA prices were down about US$5 to US$10 per ton on markets to US$720-725 while MEG prices fell US$10 to US$860.

This is about US$20 lower than prices nominated by major producers in Asia for June and July delivery, as a clear sign of a downward trend. Crude oil prices were also sharply down in the past two weeks after reaching record highs. Production of OPEC members is apparently rising and could offset the negative effect of continued sabotage in Iraq.