Strong Demand Fundamentals Amidst Logistics Disruption Drive PTA Prices in Global Market

The price of Purified Terephthalic Acid (PTA) has experienced a significant surge in the global market. In the European market, prices rose sharply at the beginning of the month and remained stable thereafter. Similarly, in the Asian market, PTA prices increased from the start of July 2023. The driving force behind this price increment was the prevailing macroeconomic situation, coupled with mounting cost pressures from the upstream Paraxylene markets amid strong downstream industries performance.

Regarding the upstream market, the rise in crude oil prices has supported the Paraxylene market, which serves as the feedstock for PTA. There are no imminent plans for new Paraxylene units to be implemented. Meanwhile, the high operating rate of PTA and polyester plants has made it challenging to gauge Paraxylene's supply and demand dynamics, resulting in strong demand-side performance. In the downstream sector, the polyester polymerization rate is expected to remain high, with improvements in exports and relatively low inventory levels.

In the European market, the hike in PTA rates can be attributed to the country's struggle with rising inflationary pressures. Although there has been a slight easing of inflation in recent months, it is expected to remain persistently high for an extended period. This has taken a toll on the manufacturing sector, which the soaring feedstock prices have particularly impacted. In the meantime, PTA supply in the region was performing smoothly, while an additional challenge arose from surcharges imposed on freight rates for vessels sailing partly empty. The increase in water levels in the Rhine River was not sufficient for cargo vessels to sail fully loaded in northern areas, leading ship operators to apply extra charges on freight rates to compensate for partially empty vessels. However, the situation has improved, as heavy rain brought the water level back to normal.

In the Chinese market, adverse weather conditions caused by typhoons have impacted logistics in certain regions of South China and East China. This led to temporary transportation disruptions in some areas of South China and the suspension of operations at certain docks in East China. As a result, PTA dock inventories experienced a decrease. However, both the upstream and downstream sectors of PTA are currently maintaining sufficient inventories, and the operation of facilities in these sectors has not been affected so far.

As per the latest plant news, the operating rate of several plants has slightly declined. Notably, Zhongtai Chemical has postponed its restart, and the restart time for Sanfangxiang has not been confirmed yet. Additionally, Dushan Energy is currently undergoing maintenance, and Fuhaichuang is maintaining its operating rate. Therefore, the operating rate of PTA plants is anticipated to hover around 80%.

In conclusion, the Analyst predicts that the market price for PTA might maintain an uptrend in its prices in the upcoming weeks due to robust supply and demand dynamics. However, the actual inventories have not significantly accumulated due to the high offtakes from the polyester industries.