With the PX settlement moving up 6.15 cpp, PTA August contract is now calculated at 57.83 cpp and DMT is calculated at 60.69 cpp. Contract prices have respectively increased by 4.12 cpp and 3.76 cpp. This should help to push downstream values up on a cost-plus basis. Of course, this will bring imports back into the picture as prices in Asia are beginning to stall a bit.
Moderate demand continues to keep plants operating below capacity. It is too early to say if the full increase in raw material costs will be passed on to consumers, though in most contracts this remains largely automatic. DMT contracts will move with the Para-xylene price.
The resolution in July ACP and quick settlement for August ACP provided some much needed stability for PTA. August clearly showed an increase in contract values with two producers settling at $1365 CFR. And with spot PX solidly over the 1400 $/MT mark, PTA producers had few options, but to push up spot prices going forward. Offers are now at $1020-$1030 CFR China, up $20 over last week, but still disconnected based on feedstock values. Based just on partial ACP value at 1365 $/MT, PTA prices should be closer to 1040-1050 $/MT; more so if averaged with current spot values.
This creates a mixed outlookfor PTA. Inventories are balanced to snug in most areas due to poor economics and judicious operating rate cuts in March and then again in June/July. Looking ahead however, there will be superscale PTA units coming onstream in China over the next two months significantly pushing up supply. As such, long traders may look to unload sooner rather than later, stalling price gains in the near term. Further out, regional producers in SEA and Korea/Taiwan may look to take advantage of their domestic tight supply and increase PTA values accordingly. CFR China prices will likely have trouble firming up due to competition from the new capacities.