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Insight | Time:Aug 10 2018 3:15PM
Polyester feedstock remains firm,some PSF/fiber chip plants cut output
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Bullish PX market lost some steam this week, and the Tuesday's fall was the first time that spot prices had fallen since July 23. However, in other trading sessions, PX market was still in line with the move in Chinese PTA futures. CNOOC Huizhou cancelled 50-day maintenance plan in Oct due to high PX-naphtha spread. Sinopec Jinling Petrochemical may also cancelled its maintenance plan in 2018. Fuhaichuang (former Dragon Aromatics) was likely to restart its PX plant in end Sep or early Oct.

ZCE PTA futures maintained strong upward move this week, despite the fall on Tuesday. Active transactions of spot PTA and supply tightness still supported PTA prices. Yisheng restarted 2.2 million tons PTA unit in Ningbo Wednesday after 3-day turnaround. Yisheng originally planned to maintain the unit for 14 days. All units of Yisheng now were running stably. Hengli Petrochemical planned to maintain its No.2 PTA unit in Sep. The unit has a capacity of 2.2 million tons. The shutdown period has not been confirmed so far.

Upward move in MEG market slowed down this week and prompt/forward spread narrowed gradually. Supply-demand condition for MEG remained good. Port inventory continued decreasing this week. While heavy selling activities still weighed down prices.

Profits in polyester and downstream sectors narrowed apparently amid surging PTA prices recently. Profits of POY were still good while of other products retreated to break-even lines. In downstream, weaving mills, particularly wrap knitting plants faced increasing pressure from higher feedstock prices. Some associations of weaving industry in some regions called for output reduction to cope with surfing feedstock prices.

Some PSF and PET fiber chip producers gradually lowered operating rate. However, overall impact of output reduction will be limited, as operating rate of polyester plant decreases less than 2 percent.

Currently, PET fiber chip profits were moderate. Only Sanfangxiang and China Resources cut output. While looking ahead, some producers might consider lowering output with the approach of slack season for PET fiber chip.

As for filament yarn, inventories were still at very low level and POY profits were good. PFY producers may not cut output deeply in short term.
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