Concerns over the eurozone debt and poor downstream polyester sales caused purified terephthalic acid futures on China's Zhengzhou Commodity Exchange to erase their morning gains and end the day down 5.72% from the previous close.
Benchmark PTA contracts for January delivery shed Yuan 526 ($82) or 5.72% at the close of business at 1501 local time (0701 GMT) even though it started the day Yuan 34 higher. The futures broke Yuan 9,000/mt support to close at a three-month-low of Yuan 8,660/mt.
With downstream polyester yarn's production/sales ratio at a low 30-40% over the weekend, market watchers expect the fiber intermediate to fall further.
"The polyester peak season ends in September. After that, China will be closed for a week-long National Day holiday [starting October 1]. There is no upside for PTA now," said a Chinese trader.
As a result, the PTA spot price on Monday fell to a six-week-low of $1,243/mt CFR China for Taiwan-origin cargoes.
"There was a morning trade at $1,260/mt CFR but now you can't even find buyers at $1,250/mt CFR," the trader added.
PTA feedstock paraxylene also closed $21/mt lower at $1,648/mt CFR Taiwan/China. Offers flooded the market but bids were hard to come by. At current PX value, PTA makers would need to break even at $1,254/mt, given a PX conversion factor of 0.67 plus a conversion cost of $150/mt.
