In the Far Eastern economies there is an expectation that feedstock price, specifically PTA, may decline further. Therefore, downstream buyers have therefore held of their purchases and in some cases asking for discounted prices. This is slowing down filament producers sales. A multitude of reasons have resulted in price reductions; power restrictions, restrictive monitory policy, international oil prices have reduced feedstock costs, but also raised speculation amongst buyers that prices would further reduce, which has further retarded sales. 2010 was a year of record profitability which resulted in the injection of 2 million tons of filament expansion for 2011. Now this is being seen as a surplus in the short term leading to a bearish sentiment in this sector. In Taiwan, there has been a steady build up of inventory to 20 days. A stock of 15 days is considered a good indicator of downstream demand, which seems to be waning right now. This has resulted in steady erosion of prices to NT$88-90/kg in May from NT$ 96-98/kg during April for DTY 75 den. In light with the market scenario many producers are bringing forward their plant turnarounds. Local and export volumes remain weak.
In NA, the BCF business has steadily grown to over 25% compared to the same period last year. However, a general weakness in the market is beginning to impact BCF sentiment. Although there has been capacity enhancement, but producers feel that the overall market conditions should improve if BCF is to continue to grow as it has in the recent past. Carpet producers continue to introduce different styles and differentiate product to enhance sales. The automotive sector continues to perform strongly, but the shortage of PTA induced by force majeure of BP PTA, is a major cause of concern, casting doubt on availability. This specifically at a time when the automakers are expecting to sell over 13 million pieces in 2011, which should provide enough momentum to downstream demand, and will help stabilize feedstock pricel. Even though apparel sales have remained steady, but knitters and woven fabric producers are being very prudent in holding onto stocks. The home furnishing sector has remained calm, but the automotive sector continues to do well. Texturizing rates have been quite good, and especially air jet texturizing for the automotive sector. Internationally, due to declining feedstock prices, imported material has started to make its way into the market as both POY and textured yarn have become competitive with local production.
