After a persistent decline in June, Purified Terephthalic Acid (PTA) prices in China entered a period of cautious stability in the first week of July 2024. This stability comes despite higher production costs and high freight charges. The continuously growing logistical issues including heavy floods and rains have hampered the supply dynamics which led to a shortage in the Chinese market. However, the help of high operating rates of PTA, which is still above 82%, provided some support to the market and hence, balanced the dynamics during this timeframe.

Earlier in Jue 2024, restarts of several PTA plants had certainly loosened the supply, putting downward pressure on prices. However, the recent delay in the restart of a 1.5 million-ton PTA unit in East China which has been pushed back to mid-July, and a planned maintenance shutdown of a 2.5-million-ton unit in Northeast China this weekend has disrupted expectations and instilled a sense of tighter supply in the market. Moreover, rising crude oil prices have pushed up production costs for PTA, creating an upward price pressure. Additionally, port congestion due to recent floods and logistical issues have increased freight rates, further fueling a bullish market sentiment. Delays in deliveries from Asia further disrupt the supply chain and contribute to higher bullish sentiments.

Despite the unexpected factory shutdowns, the overall operating rate of the PTA industry is still above 82%. This continued high production level has somewhat mitigated the impact of the shutdowns and maintained a relative balance in the supply-demand equation. However, with more plants restarting soon, the possibility of inventory buildup is a looming concern. Compounding the potential inventory issue, the current low demand season for downstream polyester products further declined the procurement of PTA. As polyester factories reduce production, demand for PTA has fallen, creating weak market fundamentals during this timeframe. While the recent factory shutdowns might suggest tighter supply, the high operating rates in the industry and the upcoming restarts act as counterweights, keeping the market relatively balanced. Moreover, the potential for inventory accumulation and the decline in polyester demand pose significant challenges to increasing the price trend of PTA.

As per ChemAnalyst, the PTA prices in China are expected to showcase a marginal rebound due to persistent logistical issues. However, the demand from the plastic market is foreseen to not improve any time soon, but the consistent logistical issue could create a temporary demand during this timeframe to secure required cargoes.