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Insight | Time:Jan 12 2017 2:56PM
Year-end review of PTA market in China
 
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In 2016, PTA spot prices rebounded firmly and then kept range bounding, strengthened up in the end of the year. PTA annual average prices of 2016 were calculated to 4617.5yuan/mt or $602.27/mt, down by 5.47yuan/mt or $28.13/mt year on year.

PTA capacity grew by 2.2 million mt/yr and reached 46.14 million mt/yr by the end of 2016. The capacity growth rate decreased obviously and may keep low for a while.

PTA production of 2016 totaled to around 33.33 million mt/yr, up 7% year on year. The increment came from the new unit started in Hanbang and also the fact that mainstream units widely kept a high operating rates. A few plants ran at above 100%, particularly in the fourth quarter.

PTA average operating rate of 2016 was around 73%, up 7% year on year. On one hand, 3 million mt/yr of idle capacity was deleted at the beginning of 2016. On the other hand, the high operating rates of mainstream plants also contributed to that. The higher O/R, on some extent, indicated that the industry is constructing the bottom.

Based on spot PX prices, the annual average of PTA-PX spread was calculated to around 440yuan/mt but if calculated with PX-linked cost, the margins were quite good, especially in March, April and December. In detail, the average spread in Jan-Apr was 536 yuan/mt then fell to 300-450yuan/mt since May but expanded in the fourth quarter when PTA turnaround and active PTA procurement by major suppliers.

Summary:
1. PTA de-capacity continues and small-scale units may be wiped out
2. PTA-PX spread narrowed to low levels and reviving signs emerged
3. Acquisition and merger become a new influencing factor
4. State-own enterprises turned more active
5. PTA was still the weakest link in polyester industry
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