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China PTA users to accept new 'PX-link' CP settlement mechanism short termSingapore (Platts)--24Jun2014/800 am EDT/1200 GMT
Approximately 70-80% of polyester and polyethylene terephthalate manufacturers in China have accepted the new terephthalic acid term contract price settlement mechanism named "PX-link" on a short-term basis, several industry sources said Tuesday.
A Chinese domestic PTA producer said Tuesday that approximately 75% of his clientele has accepted PX-link. Several other industry participants also said this week that "most players in the downstream market have accepted the new price mechanism."
However, some industry sources said that this acceptance was short term, and that price settlement for the month of July may still be open to negotiation.
"This acceptance is a natural outcome of the surging domestic PTA prices in the weeks before," a trading source said Tuesday. "Polyester manufacturers have realized that a settlement based on the domestic spot average this month will not be any more favorable than the 'PX-link'," the source added.
The Chinese domestic PTA marker was assessed at Yuan 6,585/mt on June 2, according to Platts data. The marker then peaked at Yuan 7,430/mt on June 13, surging Yuan 845/mt from the beginning of the month.
"Ever since news of players accepting the'PX-link' came out, the tight domestic market in China has found some relief," an industry source said Tuesday.
Market sources said that PTA end-users have stopped their heavy purchasing of spot cargoes in attempts to resist the new term price mechanism proposal.
Additionally, China's Sinopec restarted four PTA plants across the country last Wednesday, with a total combined capacity of 1.42 million mt/year.
The China PTA domestic marker was assessed at Yuan 7,300/mt Monday -- down Yuan 130 week on week.
