The blog is structured in a way so that it can take aboard, new comers as well as informed audience, and apprise them with current market situation. To cater for both classes, we initially jump right into business discussion as it relates to the market, while always keeping in mind the main objective of this blog; ascertaining short term and long term demand and pricing trends. However, during the course of our discussions, we may delineate a course outline as well. This will serve the professional, in better analyzing the structure of the value chain, and also defined metric for basing pricing decisions. We will incorporate this outline during the course of our discussions.
Acronyms are used often in the business discussion, therefore, some to be kept in mind for better comprehension of the value chain are as follows:
ACP Asian Contract Price
NAC North American Contract Price
EUC European Contract Price
NA North America
EU Europe
MEG Mono Ethylene Glycol
MX Mixed Xylenene
PX Paraxylene
PTA Purified Terepthalic acid
PET Polyethyleneterepthalate
OR Operating Rates
FC Fixed Cost
VC Variable Cost
POY Partially oriented yarn
FDY Fully Drawn Yarn
DTY Drawn Texturized yarn
PSF Polyester Staple Fiber
Ktpa Kilo Tons Per annum
DEN Denier
dTEX decitex
BCF Bulk Continuous Filament
PC Polyester Cotton
CT Cotton
In the simplest of terms, it would be good to make note of the fact, that plastics i.e., PET, PVC, PP etc have an origin from crude oil. On one side of the refinery operations Napthalene is produced via hydrocracking from a wide range of refinery feedstocks. Next a BTX (Benzene, Toulene, Xylene) extractor, which is also an aromatic complex, convert naphtha, from a variety of sources, and pyrolysis gasoline into the basic petrochemical intermediates: benzene, toluene, and xylenes. Conventional PX technology is based on the isomerisation of mixed xylenes. High purity product can be obtained using crystallisation or selective adsorptive separation. Next PTA is produced by the catalytic liquid phase oxidation of paraxylene in acetic acid, in the presence of air. On the other side of the refinery operations most ethylene used for petrochemical applications is produced by steam cracking of naphtha or natural gas liquids.
From the above stated information, technical jargon as it may appear to many readers, what needs to be understood from a commercial standpoint is which operations are predecessor to whom. It is this value chain, which defines the supply slackness and tightness at any given point in time, which again impacts two variables; supply/demand, and pricing orientation.
So two learning’s that I would want the readers to take away from this discussion are
- Understanding the acronyms
- A reasonable understanding of the manufacturing value chain to better understand the supply chain.
