China PTA Price Decreases in November 2024 Amid Early Destocking

The Chinese Purified Terephthalic Acid (PTA) market experienced a downward price trend throughout November 2024 due to oversupply from early destocking and subdued demand from the downstream packaging industry. This downtrend has been followed since mid-October 2024 when the market witnessed a consistent slump.

The PTA prices in China have continued to showcase a downward trajectory to settle the prices at USD 570/MT, PTA Ex-Qingdao with a monthly drop of 5% during November 2024. The PTA market has been dealing with increased supply from plant operations amid the completion of scheduled maintenance activities at various PTA plants in mid-to-late November led to a significant uptick in operating rates. As per the data, PTA load increased slightly by 0.3 percentage points to 81.4%. Moreover, Yisheng New Materials' 3.6 million tons PTA unit started operations on November 22nd, while Yizheng Chemical Fiber's 1.5 million tons unit is set to resume around November 23rd. This increased production capacity injected additional supply into the market, further exacerbating the oversupply situation. To alleviate inventory burdens, some market participants engaged in early destocking activities. This increased the supply in the market, further exerting downward pressure on prices. To stimulate demand and clear inventories, producers offered significant discounts on PTA, making it more affordable for buyers. However, these discounts eroded profit margins and contributed to the overall decline in prices. Furthermore, the availability of sufficient spot supply, coupled with the off-peak season for polyester demand, further contributed to the downward trend. With reduced demand from downstream industries, the market was flooded with excess inventory.

In the meantime, the off-peak season for polyester demand, characterized by reduced consumption in key end-use sectors like textiles and packaging, limited the absorption of additional PTA supply. As a result, the market witnessed a decline in demand, further impacting prices. The decline in prices for Asian downstream PET resin, a key derivative of PTA, eroded the profit margins of PTA producers. This reduced their incentive to maintain high production levels, potentially leading to further price reductions. Additionally, the decrease in prices for key feedstock materials, including Propylene and Paraxylene, eased the cost pressures on PTA producers.

As per ChemAnalyst, the PTA prices in China are expected to further decrease in December 2024 due to the seasonal oversupply situation, driven by an increase in production capacity and weak demand. While favorable feedstock cost dynamics could provide some relief, they seem to be insufficient to counterbalance the negative impact of oversupply and weak demand.