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Tuesday, January 25, 2022

China polyester demand pushes May Asian PTA production margin to 10-month high

The average production margin for Asian purified terephthalic acid in May rose to minus $48.89/mt, the highest level seen since July 2012, amid firm PTA demand for polyester, Platts data showed. In April, the average stood at minus $83.03/mt.

The CFR Taiwan/China paraxylene feedstock price fell $38/mt month on month to average $1,426.98/mt in May, while the CFR China price rose $8.87/mt to $1,050.05/mt.

The Asian PTA production margin is calculated by multiplying the CFR Taiwan/China Platts PX assessed price by 0.66 to get the conversion cost and adding $150/mt processing cost, and then subtracting the whole from the CFR China Platts PTA assessment.

The Asian PTA market was firmer in May due to higher requirements from polyester makers in China with the onset of the summer demand season. On the other hand, the Asian PX market was under pressure as some Chinese PTA producers started selling PX to cut high inventories.

“The PTA margin is still negative but it improved a lot in May,” a PTA trader said.

Industry sources expect Asian PTA margins to face a downturn in June when the summer polyester demand ends. “Polyester summer demand season typically ends by the middle of June. As a result, the Asian PTA market will likely fall from June,” said another trader.

Asian PX could turn firmer in June, however, on expected supply tightness. India’s ONGC is likely to start up its new 900,000 mt/year PX plant in Mangalore in the third or fourth quarter of this year, instead of the second quarter as planned initially, sources close to the company said. A delay in the construction was responsible for the later startup, the sources added.

Startup of PetroChina’s 680,000 mt/year PX plant has also been delayed from May to June-July as the company had to carry out safety checks following a 6.6-magnitude earthquake in Sichuan on April 20.

Source: platts.com

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