Asia’s purified terephthalic acid (PTA) market is expected to hold steady in January amid stable-to-firm demand from China and India, unlike in previous years when the Lunar New Year period had translated to weaker demand and prices, market sources said on Friday.
Downstream demand for PTA in key market China is expected to remain stable throughout the Lunar New Year period, with polyester end-users requesting additional contract volumes before the holidays start in the third week of January.
The Lunar New Year, which falls on 28 January 2017, is celebrated in most parts of north and southeast Asia. China will be on holiday from 27 January to 2 February.
“End-users have requested for more cargoes as they expect to run at high rates into the Lunar New Year holidays. While some may drop operating rates slightly, the holiday may not have as much of an impact as seen in previous years,” a key PTA producer in China said.
Domestic supply in China is tight, with local producers having limited volumes available to contract customers and for exports, having oversold futures cargoes in the previous weeks, market sources said.
Key producers have been purchasing spot Chinese yuan (CNY)-denominated volumes of 10,000-30,000 tonnes each week for the past three weeks.
The tightness has spilled over to the export markets, where only cargoes loading from Ningbo and Dalian in northeastern China are available.
Indian buyers have been actively seeking cargoes in the market, with at least 25,000 tonnes of spot PTA volumes booked to load from southeast and northeast Asia in January. Deals have been done largely on formula basis – from a discount of $2/tonne to a premium of $2/tonne to the ICIS CFR (cost and freight) CMP (China Main Port) quote.
There is a shortage of PTA in India following the shutdown of a 470,000 tonne/year No 1 PTA line in Haldia, West Bengal. The plant operated by Material Chemical and Performance Intermediaries (MCPI) was shut in end-November for a three-week turnaround. The company ran the line in end-December for about a week before shutting it down again on technical issues.
The supply tightness in the Indian market could continue in the short term, as MCPI plans to shut its 800,000 tonne/year No 2 PTA line in March, while another key producer, Reliance Industries, is planning to stop production at its 1.1 m tonne/year PTA line in Dahej for debottlenecking. The debottlenecking will increase the line’s capacity by 10% to more than 1.2m tonnes/year.
A seasonal drought in the country may also have an adverse impact on chemicals production in India in the second quarter of 2017. In 2016, Reliance Industries had shut its two major PTA lines because of an extended period on water shortage. - ICIS