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Market Monitor | August 2018

PTA to face price pressure on fresh supply?

Supply of purified terephthalic acid (PTA) in Asia is expected to lengthen in the second half of 2018 as new capacities will start up in the major markets of India and China, amid a slowdown in demand, according to ICIS, a leading petrochemicals market information provider. Major plants would have resumed production after unplanned outages to ease the current global supply tightness that has been driving up Asian prices, while demand typically weakens in the third quarter.

Asian PTA prices may start to come under pressure as fresh supply will hit the markets when new major regional plants start production in the third quarter.

“Market sentiment is currently pessimistic about the outlook, however, this can quickly change if we see a sudden uptick in downstream demand,” a China-based producer said.

In India, JBF Group’s 1.25 m tonne/year PTA unit in Mangalore is expected to start up in the third quarter, although the schedule is still fluid, according to several market participants. In China, Fuhaichuang Petrochemical, formerly known as Dragon Aromatics (Zhangzhou), is planning to resume operations at its complex in the third quarter of 2018 after a prolonged shutdown.

Its petrochemical complex in Zhangzhou has a 4.5m tonne/year PTA plant comprising three 1.5m tonne/year lines, two of which have been in operation since end-2017. The company is likely to restart the third line once smooth operations at its upstream paraxylene (PX) unit at the site is achieved, market players said.

In Europe, Indorama Ventures Portugal plans to start up in July an idled 700,000 tonne/year PTA unit in Sines. Thailand-based Indorama Ventures Ltd acquired the plant from Portuguese Artlant PTA in late 2017. All these factors should see the narrowing of the price gap between China’s import and domestic markets as early as July, after widening steadily from March to May.

As of 12 June, the gap stood at $96/tonne, down from the peak of about $111/tonne on 30 May.

Asia’s PTA prices are currently steady at firm levels. Regional end-users preferred to procure cargoes on a need-to basis and were not keen on building inventories. Future movement will depend on market conditions in the downstream polyester industry.

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