STRUCTURE OF LEARNING

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

VALUE CHAIN

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. 

OUTCOMES

So two learning’s that I would want the readers to take away from this discussion are

1. Understanding the acronyms
2. A reasonable understanding of the manufacturing value chain to better understand the supply chain.

FOREWORD

A couple of professional reasons have prompted me to start this blog.  Ever since I stepped into the PET (Polyethylene terephthalate) market, one of the most relevant point of discussion for all professionals that I come in contact with is understanding the correct behavior of the market, and specifically how that relates to future pricing trends.  What I have seen is a lack of convergence of point of views when a price of a contract has to be figured out.  With its origin from the crude oil, it would not be wrong to say that this sector has its fair share of complexities, even though the delivered product may just be a polyester fiber or a chip.  Further the application of this product in the textile sector, food and packaging industry are enormous.  The common eye may overlook its importance, but professionals of this sector truly understand its pervasive scope as a globally traded commodity. 

So if I were to sum it up, some of the factors that have motivated me to start this blog are as follows:

1. A firm understanding of the polyester market fundamentals
2. What factors to be considered while predicting the future market  pricing trend and assessing demand?
3. To educate audience on how the whole sector is structured
4. To understand better the dynamics of the supply chain i.e. from crude oil to the production of polyester
5. To deliver market updates related to acquisitions, plant expansions, technological advancements and market developments. 

My approach of building up this knowledge base for the viewers is first providing an over view of the value chain, without delving into the technical complexities.  Also I would like to state the acronyms that are commonly used, so that the audience remains aware when they are applied.  So after having given the basic over view, I would start talking of the fundamental components that affect the downstream polyester sector.  The paradigm over which this blog is being synthesized, is that all readers, novice or advanced should be able to attain knowledge from these articles, that would help in knowledge propagation.   

In short, specifically we would be regularly analyzing the prevalent market scenario of this sector.  Broadly we would be touching upon factors related to global economy, international fiancé, international trade & marketing and their implication on this sector. 

A CHANGING MOMENT

Dear Readers,

For me, this day January 1st, 2011, may be considered a vital and one of great significance.  Why the over dramatics, not because today I’m setting the corner stones of starting my first blog, but most importantly, I'm taking a step whereby I will open to the world a channel of communication and a knowledge base.  Blogging will be a medium that will allow me to interact and develop a road map for an intellectual journey. 

The reason for taking “The Polyester Value Chain” as my starting blog is simple:  it is most relevant to my current field of profession.  Further this sector in its totality influences, our every day life, in ways in which consumers perceive not.  In fact the average consumer is regularly making decisions to purchase products containing polyester.  The reason for subscribing to this topic is its relevance in our every day lifestyle, and to open to readers the Global macroeconomic fundamentals governing the dynamics of this sector.  It’s about creating the connection between market indicators and chain operations to the perceptions of the common man and thus his purchasing decision.  This blog will also lend support for all professionals working in the polyester sector who are regularly making purchase and sales decisions as part of their job function. 

I draw the attention of an audience, which wants to see global economics, international finance, cost economies, their interplay and practical application in the sector of the “The Polyester Value Chain.”

So readers are we ready to start this journey?!!!!

Regards,

Polyester Guru