Polyester Chain: Overall Prices Down

Sept. 23, 2009 - PRLog -- Crude oil: Above US$72 a barrel
Crude oil prices edged up slowly this week as new US data that suggested a slow economic recovery which would mean less demand for energy in the near term and potentially low-priced gasoline and heating gas for some time. The US Labor Department data indicating that new claims for unemployment benefits fell to the lowest level since early July and Commerce Department’s data showing housing construction in August surging to the highest level in nine months with a flurry of new apartment building projects around the country. However, on the surface that would suggest energy consumption may rebound, but the jobless numbers are far below levels that would indicate a healthy economy. The recession sapped US fuel consumption, and oil stockpiles are 14% higher than last year. Nevertheless, Morgan Stanley has raised its forecast of crude oil price to US$105 a barrel in 2012 from US$95 due to tightening spare capacity. It expects global spare production capacity to stay ample through end-2010, before declining in 2011 and reaching 2007/08-like tightness by 2012. By the end of this week WTI for October delivery was up 4% or US$2.75 at US$72.04 a barrel on the Nymex while the European Brent for October closed at US$71.32 a barrel, up US$3.63 (3.4) from the closing of the previous week.

Polyester Chain: Overall Prices Down
Ethylene price declined in Asia and Europe, but were up in USA. In Northeast Asia, ample supply caused by weakening domestic demand and approaching National Day holiday eased prices while short supply in SE Asia was helpful to consume the surplus of NE Asia. Nevertheless, ethylene producers were focusing on reducing inventories because of surplus supply and weak derivative prices. Paraxylene was 5% cheaper in Asia and 4% in Europe with October sentiments pessimistic, especially due declining demand from downstream polyester producers. MEG and PTA prices weakened reflecting the waning demand from polyester producers. Cost support from feedstock ethylene and paraxylene was also weakening. Polyester chips prices declined in line with feedstock values and low buying interest. Downstream, prices of polyester filament yarn continued to decline, particularly DTYs, engaging other markets besides China. PSF prices moved down in China and Pakistan with numbers retreating to a low of recent months. The fall was reflecting the fall in input costs – PTA and MEG, in recent weeks.

Nylon Chain: Benzene. Caprolactum Cheaper
Benzene prices retreated across markets as oil prices were range-bound around US$72 a barrel with no signs of any upheavals. The Asian market was oversupplied and a sharper decline in European prices has almost closed the arbitrage window for Asian benzene. Some benzene was exported to Middle East to make up for the shortage caused by the delay of startup of Kuwait new aromatics unit. Caprolactum prices too declined due to expectation of waning demand from nylon producers particularly, tire cord fabric market and cost support from benzene. The latest US announcement to hike tariffs on car and light truck tires imported from China to 25-35% in next 3 years had slowed down trading and added to this was upcoming National Day Holiday week in China. However, planned shutdown for turnaround in October is likely to offset the tariff influence as supply will be reduced. Nylon chip prices declined on weakening support of caprolactum and waning downstream demand. Nylon filament prices were firm but had weak support from falling prices of nylon chips and caprolactum. Buying interest from downstream textile mills was also declining.

Acrylic Chain: Prices Firm
Feedstock propylene prices softened a bit in Asia while they were stable in Europe and rising in USA. The drop in Asia is attributed to the expectations of falling polypropylene sentiment and rising propylene stock in China, India and Middle East caused by startups of new capacities. The oversupplied Asian market was considering exporting propylene from South Korea to short-supply US Gulf. Acrylonitrile prices in Asia were up slightly due to tight spot supply. However, the market jittery over falling demand from ABS sector although that from acrylic fibre market was stable. Acrylic staple fibre market picked up a bit amid stableness supported by the tight supply and strong acrylonitrile prices. ASF prices moved up moderately but were limited by the need the strong demand support.

Viscose Chain: VSF Stable for Four Successive Weeks
Wood pulp continued to remain in short supply and prices rolled over from previous week with no new offers. In China, cotton linter prices softened a bit as new linters arrived in the market. Viscose staple prices were stable across markets in China and India rolling over previous week’s numbers. However, they were seen rising a bit in Pakistan local market. Thus, prices have almost remained stable for the fourth consecutive week in China and India. Viscose filament yarn prices were raised in China while they rolled over from previous week in India.

Cotton: Mixed Trend
Prices of cotton inched up a bit across markets with Cotlook ‘A’ index up from 63.55 cents to 65.25 cents a pound. In USA, Pima cotton was a bit cheaper while couple of varieties in India saw prices dropping. Pakistan cotton prices were stable. In China, the cotton index was up RMB58 compared to last week.

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