For the Quarter Ending June 2021
PTA supplies in the North American region, improved comparatively over previous quarter as the industrial infrastructure restored in the US Gulf coast, and major manufacturing sites were operating at optimum efficiencies. Despite that, the regional supplies remained tight during the second quarter of 2021 due to affected imports. The Mexican PTA trade slumped during the second quarter owing to the strengthened replenishment of inventories ahead of the upcoming hurricane season in the North America. Demand was bolstered from the downstream polyester industries as the offtakes witnessed a seasonal peak with the rise in textile manufacturing. As a ripple effect, PTA pricing took an uptrend with FOB Texas discussions settling at USD 1250 per tonne, showing an increment of 17.92% in the month of June itself.
PTA supply outlook in the Asia Pacific region observed a mixed trend during the second quarter of 2021, owing to the series of planned turnarounds in China and NE Asia which tightened the overall product supply after following the uptrend in the first half of the quarter. A leading Chinese PTA manufacturer Yinsheng Petrochemical commissioned its two new PTA units in May. Also, due to the better production margins in its new PTA lines, Yinsheng Petrochemicals announced the permanent closure of its oldest 650 KTPA (PTA. No 1 Line) in Zhenjiang province. Noting the series of capacity additions, it is anticipated that China will further expand its PTA capacity by additional 3.3 million MT in H2 2021. Against the backdrop of already lengthening supplies, markets participants were closely tracing the movement in the Indian demand patterns as the second wave of pandemic dented the demand by the biggest Asian PTA importer. The pricing trend in China showed marginal falls with FOB Qingdao prices assessing at USD 859 per tonne in June.
The supplies conditions in the European PTA market improved over the last quarter as an upstream Paraxylene unit ended its turnaround period in the mid of the second quarter. However, limited product availability in the US market affected the export volumes to the European region. Some South Korean PTA exporters were heard sending volumes to the European and Turkish markets, to leverage the Free Trade Agreements with these countries. Freight charges in the Atlantic region dropped, as a ripple effect, arbitrage window between the Europe and North America strengthened. Resumption in the market activities supported the public movement in several parts in Europe that further prompted surge in PTA demand from the polyester sector.
For the Quarter Ending March 2021
The Purified Terephthalic Acid (PTA) market in the North American region remained tight during the first quarter of 2021, due to production disruptions amid the unprecedented arctic freeze in the US gulf region. The abrupt weather conditions caused unavailability of key feedstock for several weeks due to plant shutdowns. The demand from the downstream PET sector surged, following strong competition among the buyers to replenish their inventories ahead of the expected rise in demand in the upcoming years. PTA prices witnessed an uptrend taking cues from the surge in prices of upstream Benzene and Paraxylene.
Supplies in the Asia Pacific region strengthened due to the addition of new PTA facilities in China during Q1 2021. Total 7.9 MT per year of PTA capacity was commenced from Fujian Baihong plant in Quanzhou, Shenghong petrochemical at Lianyuangang, and Yisheng petrochemicals at Ningbo. However, some constrains were witnessed in the region due to several plant turnarounds amid Chinese lunar new year holidays. Demand was deemed healthy in the first quarter, as the exports to the western region and import demand from the southeast Asian region improved. Prices of PTA in FOB Shanghai followed an upward trajectory throughout the quarter averaging at USD 908 per MT for April deliveries.
Supplies in the European region remained tight during the Q1 2021, owing to the hampered transportation in the northwest European region that led to the shortage of key feedstocks. PKN Orlen facility in the Poland witnessed significant decline in PTA production, followed by the unplanned outage in the INEOS PTA facility in Belgium. Further imports to the region declined amid the Suez Canal blockage and high shipping cost during the quarter end. However, due to the supply chain disruption, demand from the downstream PET sector surged during the Q1 2021.
Supply overhang of PTA (Purified Terephthalic Acid) in the Asia Pacific region eased in the near term as several manufacturers in China and India imposed a temporary turnaround amidst wavering concerns over coronavirus spread and dwindling polyester demand. However, the impeding start-up of new PTA capacities in China by the next quarter has stressed manufacturers and traders over surplus production in times of hovering downstream demand. As per the industry experts, the market outlook of PTA industry is likely to remain under downward pressure in the next quarter as well, with supply outstripping the demand.
As the region has geared steady pace to resume activities after considerable upliftment in lockdown restrictions, the demand for PTA from the polyester as well as plastic industry has witnessed a much-needed recovery after witnessing a prolonged dullness in the previous quarter. However, improved market fundamentals are likely to shroud in the coming months with increment in PTA cargoes from Asian region following the slated capacity additions from the production hub, China. Furthermore, concerns over resurgence of coronavirus in several parts of Europe has also raised serious concerns over demand outlook of PTA in the near term.
The North American PTA market has gained considerably amidst the increased demand for packaging materials due to rising coronavirus contagion and is anticipated to receive further boost from the sudden shortage of aluminum cans in the region. Increased demand on positive shift in consumer sentiments towards single-use plastics has provided the US PTA industry with appreciable gains. And as long as the shortage of aluminum can persists, the regional PTA market is unlikely to face severe challenges from demand side. However, the prolonged slowdown in Polyester industry has marginally dragged the present growth of the PTA market from the packaging sector.