It was the end of 2011, PTA futures price dropped continuously from the high point in this year and the PTA factories finished their windfall benefit age and entered the meager profit age. The production capacity of PTA equipments which began to produce in 2011 was 4,500,000 tons, but the new capacity planed in 2012 was more than 11,000,000 tons, so the market supply pressure was so big and PTA factories just dropped operation rate to keep capital flow. The PTA futures price was difficult to increase dramatically, especially the profit of processing enterprises was low and the industry competition was serious. But the PTA futures will still have opportunities, the weak market may rebound and investors should hold the market rhythm.  

The new production capacity was large but dispersed in different seasons, and especially several big equipments will be put into production in the second half of the year. So indeed, the PTA supply amount in the first half of the year was difficult to increase. The factories need to stock up before the new equipments put into production, thus the supply and demand of PX was paid close attention.

From the end of 2011 to the beginning of 2011, PTA futures price increased which pushed by PX price. Then in July and August, PX equipments breakdown led the supply suddenly be tight, and PTA futures price rebounded from 8,600 Yuan/Ton to 10,200 Yuan/Ton and upstream polyester products also increased follow PTA. In 2012, when a lot of PTA new equipments put into production, the PX production capacity entered a trough period. The stock demand of PTA factories may lead to tight supply of PX, then the PTA price may increase pushed by the cost.

The textile and apparel terminal demand was low, which lead to obvious pressure of PTA supply and demand. However, the factories were still pessimistic to the market situation in the nest year. But, the situation will be different compared in 2011.

First, currently, RMB exchange rate against USD dropped continuously, and the expectation of RMB appreciation reduced, so the RMB appreciation pressure eased for textiles and apparels foreign trade enterprises. Secondly, the textile raw materials price had dropped to a low level and the continuous drop space was not big, so the price tended to be steady gradually. The two reasons will change the situation that factories didn’t dare to make offer and get order and just took order in short and middle term, and this change will be benefit for the export of textile and apparel industry. Thirdly, the textile industry was in a cruel shuffle period, many middle and small enterprises stopped production in advance and several enterprises closed directly. This situation may release some labor force and ease the pressure of rapid increasing labor cost. Thus, the textile and apparel industry existing environment will be better in future.
 
The cotton price drooped from a high point in 2011 and fluctuated in a low point. The low cotton price hit the cultivated positivity of cotton farmers. The COTLOOK survey published on last Thursday showed that the cotton cultivated areas in 2012 will drop 9% compared to this year, and it was estimated that the domestic cotton supply will reduce in the next year. But the cotton price was low and the rigid demand still existed, so the cotton consumption amount was not likely to drop a lot. Thus, the cotton demand will not reduce and the supply amount was expected to drop, and once the cotton price increased, the PTA price will be influenced.
 
In general, PTA price will be difficult to increase in the nest year influenced by the large enhanced production capacity, but PX may push the price in due time. In addition, the demand will increase in some time and the cotton price may rise, which will promote the PTA price. It is estimated that PTA market will still be weak, but many investment opportunities will be existed.