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2011-9-15
Over the past two month, July and August, lint cotton and PTA price trends have indicate that a kind of material replacement activity has began.
In the former period, lint cotton price jumped so high that throw the whole industry into a mess. In order to make more profit, manufactures, undoubtedly will make more efforts on shrinking feedstock cost. Although cotton price is also rising now, the cheaper feedstock, PTA has taken the upper hand.
Previously, when you open a cloth or take a look at the tag of any fabric, it is easily to see “cotton 80%, Polyester 20%”, while we take a look at the spring and autumn wear this year, we found its material has been replaced quietly, with a note of cotton 20%, poly 80%.
Obviously, with a mad price increase in the lint cotton market, textile and garments manufacturers began to replace lint cotton with PTA.
At the end of August, see from the survey of textile feedstock price trend in July and August, we can find that the two core material, lint cotton and PTA price trend has two polarized. The price distinction has been enlarged, among which, lint cotton price, its third grade, in China market has dropped 20% over the past two month, on the contrary, PTA price has increased by 10% over the past two month.
PTA and lint cotton both belongs to textile material, and their usages are almost the same, how can they differentiate so much in prices? See from textile industry dynamics recently and its development trend, we will find the final reason is that a kind of material replacement activity has taken place.
As a result, the role of PTA and lint cotton replacement is not haphazard, but an inevitable result, with the development of the whole textile material.
Production capacity determines the price diverge
PTA market is more influenced by its upstream material PX price. In the night of 8th Aug, a typhoon named “Wintersweet”, broke the bulwark of Fujia Dahua chemical product company, leading to a 700 thousand ton production failure of PX on 14th Aug. In the second half of year, there will be no new PX device put into production. In September, there are several PX device will stop to check and repair, among which, Fujia Dhua device relocate will take about a year of time, which will probably lead to a shortage to the PTA manufactures. It is estimated that China will enlarge its PX importation, thus give an impetuous to PX price, as a result, boosted PTA price up.
See from product capacity, according to the customs statistics, PTA importation of China in July is 435.9 thousand ton, which reduced 58 thousand ton than that of June, and it reduced 53.7thousand ton, year on year comparison. In August, several PTA devices in China stop production, which aggravated domestic PTA supply.
The biggest difference between lint cotton and PTA is that, one is natural cultivate product, and the other is refined from the fossil oil. As for cost, in cotton textile industry, lint cotton belongs to upstream product, whose cost mainly source from farmers’ investment. The natural growth condition directly determines the activeness of cotton farmers.
Last year, after cotton price hit 32 thousand CNY/t, cotton farmers all over the country actively cultivate cotton, with its cultivate area hit the peak over the two years. The general output has not increased much in compare with that of previous years, but for the spring cotton stock, cotton output increase is a matter of fact.
Chemical yarn replace cotton yarn
Textile industry come into a busy season in August and September, however, there is a big difference on the demand of PTA and lint cotton. Though weaving plants are busy working, lint cotton inventory stay still and for the coming new cotton, the stock will be piled up.
From the cotton yarn survey, its market sale is dull all the way, with a huge stock, and soft price.
But on the contrary, PTA market enjoys a good market sale. Both of the two have come into its busy season, but the cheaper chemical product is more popular on the market.
Over the past two month, poly filament yarn price fall only once, for the reason of feedstock market price fluctuate and a straddle attitude of the weaving plants. Thus finally, chemical yarn products take the upper hand.
Lint cotton and PTA price trend of July and August indicates a matter of fact that a kind of material replacement activity has began. In the former period, lint cotton price jumped so high that throw the whole industry into a mess. In order to make more profit, manufactures, undoubtedly will make more efforts on shrinking feedstock cost. Although cotton price is also rising now, the cheaper feedstock, PTA has taken the upper hand. Fundamental feedstock is the key to profiting, and its price trend is the key to the development of enterprises.
On PTA, China PTA downstream and end enterprises are still suffering financial pressure. The busy season this year may not be continuous, which will be an uncertain factor for PTA price. Market sources expect that with the coming of traditional textile season, PTA price may obtain another impetuous. On overall, PTA is likely to up fluctuated or consolidate then.
While for linter cotton, according to the current situation, acquisition may play an impetuous to its price. When the policy price is higher than the market price, cotton market overall price change will be narrowed. Cotton price will be around 19800CNY/t, while spot cotton price will around 1000CNY/t when new cotton comes into its acquisition period.
Source:168tex.com
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