For the Quarter Ending September 2023
North America
The Purified Terephthalic Acid (PTA) market in the United States saw a significant price increase throughout the third quarter of 2023 driven by a surge in demand from downstream industries. This increased demand was the primary catalyst behind the price hike. Moreover, the PTA market benefited from rising costs in the upstream Crude Oil market, which provided support and partly offset the challenges posed by increased downstream demand. In August 2023, the Manufacturing Purchasing Managers' Index (PMI) showed a slight improvement from the previous month. Production levels stabilized somewhat, but the decline in new orders continued at a faster pace. Factory input prices remained relatively subdued, although there were signs of a potential reversal. The PMI has consistently remained below the threshold, indicating a prolonged period of contraction in the manufacturing sector. However, procurement from downstream Polyester industries remained healthy throughout the month. Additionally, the consumer price index increased by 0.4% in September, compared to the previous month, and by 3.7% from a year ago, leading to price increases across a wide range of goods and services.
APA
In the South Korean market, Purified Terephthalic Acid (PTA) prices rose throughout the third quarter of 2023. The price increase was influenced by reasonable cost pressure from the feedstock naphtha, which was on an upward trend during that period, prompting producers to raise their prices. However, inquiries from downstream PET bottle and polyester industries remained stable to weak due to economic uncertainties. Market transactions were primarily driven by immediate needs, as the terminal companies showed limited enthusiasm to enter the market. As the third quarter of the year ended, South Korea's manufacturing sector maintained a predominantly stable condition. The PTA industries operated without any supply interruptions. Nevertheless, businesses took advantage of the opportunity to hire for vacant positions in anticipation of an impending uptick in demand. Consequently, this resulted in the highest rate of job creation recorded in September 2023. As a result, the Purified Terephthalic Acid (PTA) market experienced a price surge amid an overall improvement in market sentiment.
Europe
The Purified Terephthalic Acid (PTA) sector in Eurozone remained stable in the first half of the third quarter, driven by increased purchasing activities from downstream industries, especially the packaging sector. Manufacturers noted moderate demand for PTA, and the market also benefited from rising prices in the upstream sector, driven by increased Naphtha prices during the same period. Supply of materials in the market was satisfactory. However, in the second half of the quarter, the market for PTA rebounded, as Germany faced challenges from heatwaves and heavy rainfall, causing fluctuations in the water level of the river Rhine during the considered period. Imports from other Asian and European markets were significantly impacted due to high freight charges on partially empty shipments, but this situation improved as heavy rain restored the water level to normal in early August. The shipping industry improved during the period, despite rising costs, climatic disruptions, and occasional product delays and shortages adding pressure to shipping activities. Additionally, in August, the Consumer Price Index (CPI) in Germany increased to 117.50 points, up from 117.10 points in July 2023, according to the Federal Statistical Office.
For the Quarter Ending June 2023
North America
In the beginning of the second Quarter prices of Purified Terephthalic Acid (PTA) saw an increment due to limited supply of raw material paraxylene which consequently led to depletion of inventories, thereby limiting the supplies. Significant demand from the downstream packaging industries which had just recovered kept the market situation bullish, as the size of inventories diminished. Towards the middle of the second Quarter, prices of PTA saw a further rise in prices as producers lacked inventories and saw a rise in export orders from Argentina and Saudi Arabia. Supply remained at normal levels despite optimum production despite labor disruptions on the ports of West Coast which had a significant impact on supply chains, while demand remained low due to diminished profit margins in polyester and packaging industries and a decline in domestic sales. Manufacturing activity also fell in the region due to the sluggish purchasing activity amid high interest rate and inflation, the data by FRED also indicated that the Production price Index in the US market dropped to 245.83 in June 2023. Finally, the final price of PTA was assessed to be USD 1110/MT FOB Charleston.
APAC
Prices of Purified Terephthalic Acid (PTA) showed an increment of in beginning of the second quarter as demand from PET bottle factories revived. However, towards the middle of second quarter the situation of the market turned bearish due to declination in the cost of raw material paraxylene and expansion of material in the Asian market. The bearish situation of PTA continued till the end of second Quarter of 2023 as traders experienced an oversupplied market due to decline in the prices of feedstock Crude Oil because of which production rates decreased in the region. The shutdown of Hanwha Impact Corporation in Daesan for expansion purposes did not have significant change in supply. In addition, South Korea's consumer price index rose 2.7% year-on-year in June 2023, easing for the fifth consecutive month to the lowest since September 2021, supporting the central bank's move to pause its tightening cycle earlier this year. Despite factory shutdowns, inventories in the domestic market have remained ample. Overall, the Asian market for PTA in the quarter witnessed a mixed situation, but a dominating bearish trend. Towards the termination of the quarter, the price of PTA was assessed to be USD 805/MT FOB Busan.
Europe
During the start of the second Quarter prices of Purified Terephthalic Acid (PTA) showed a bullish trend, in the European market as costs of raw materials paraxylene and crude oil increased. Production was maintained at high levels despite raw materials being expensive. Demand remained moderate to high levels due to the optimistic outlook of packaging sector and anticipation of improvement from polyester and bottling sectors for the incoming of peak summer season. However, towards the middle of second quarter prices saw a declination due to worries of the US Banking sector, pressure on oil prices and hikes in the interest rates by the Fed. Moreover, the insufficient demand from the PET sector was unable to sustain the upward trend due to the depressing outlook of offtakes from the international market. Supply remained normal as productions units continued to operate at optimum levels, however, demand was recorded to be low in contrast to the anticipated high demand from the beverage bottling industry for the peak summer season. In the meantime, European monthly producer prices fell in May by 0.9%, highlighting the challenges faced by the economy in reviving demand and regaining economic growth. Finally, the price for PTA was assessed to be USD 860/MT FD Hamburg.
During the first quarter of 2023, the price of Purified Terephthalic Acid (PTA) showed an upward trend, with prices reaching USD 1015/MT FOB Charleston in February. The price increase in January could be attributed to a series of production disruptions, while the March increment was influenced by rising crude oil prices and a labor shortage in the US market that disrupted supply and production. However, despite the price increases, new orders continued to decline, with new export sales decreasing for consecutive months, likely due to higher interest rates and inflationary pressures affecting demand. Overall, the first quarter of 2023 saw PTA prices trending upward, with various factors impacting supply and demand dynamics in the market.
Purified Terephthalic Acid (PTA) processing margin was volatile in Q1, with prices experiencing both decreases and increases throughout the quarter. The mid-quarter decline in prices was attributed to various factors, such as production shutdowns, changes in supply and demand dynamics, and bearish market sentiment. The shutdown of units like Yizheng, with a production capacity of 650/MT, for one week in end-Feb affected the supply side of the market and put pressure on prices. However, the increment in PTA prices for most of the quarter was largely dependent on the demand outlook and volatile feedstock market, as downstream industries experienced rising demand. Overall, the PTA market in Q1 seemed to have been influenced by a combination of supply and demand factors, along with fluctuating feedstock prices.
The price of Purified Terephthalic Acid (PTA) was influenced by various factors, including declining demand, changes in pricing for crucial raw materials such as Paraxylene, and fluctuations in the Crude oil market. In addition, the high inflation rate in the eurozone had an impact on the PTA market. Despite steady production rates, supply was disrupted towards the end of the quarter due to worker protests in Europe over low wages and poor working conditions. However, the industry's capabilities were sufficient to meet current demands. Even though the amount of labor at PTA factories decreased and downstream polyester demand remained moderate, PTA was still being destocked. In Europe, PKN Orlen in Wloclawek (Poland) was shut down for maintenance from 1st March to 31st March 2023.
