PTA & MEG
In the North American sector PTA prices have been computed based on a formula and settled @ 67.22 c/lb, an increase of 2.83 c/lb over the preceding month. The cost pass through has been easier, and PET prices are expected to increase proportionally. The European markets have remained sluggish, amid the complex Eurozone economy, and pass through of cost has remained slow. A seeming glut is being witnessed in the Northeast Asian and Chinese market, and PTA producer’s profit margin has remained below sustainable level. Major factor contributing to this is the slow PET sector incapable of absorbing the increasing new PTA capacities. PTA recovery is tied to uptick in PET demand which remains unlikely in the short term, but as seasonal PET demand return seemingly imminent in the medium term, late March early April, PTA recovery would ensue.
MEG global supply has remained tight, but with its price being indirectly linked to PX (heavy Naptha) side of the supply chain, MEGlobal February nominated settlement of $70/ton over January may not hold as crude oil prices have retreated. The resistance of settlement in Europe will be even higher given a recovering Euro, even though $ had recently strengthened because of an environment created by the Fed. Stocks in China are at a comfortable 700,000 Mt’s (4 week inventory), which seems to suggest a balanced market. Some shutdowns in the Middle East are expected to constrain supply, but this may not be crippling. So with a tight supply chain balance, it is expected that March would be a roll over as the cost base, now soft, will at best remain flat.
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