Textile Beacon

GLOBAL POLYESTER PRICE FORECAST

DECEMBER 2017

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In December 2017
Crude oil
Crude oil markets will remain mixed in December, as the decision by global oil producers to limit production
will lend support to the commodity, while sustained worries over US production levels will weigh on the other
side. However, prices will be pressured lower by worries of rising US shale output which may dampen OPEC’s
bid to rid excess supplies. Recent data showed that US energy companies had added oil rigs in late December,
bringing the total count to 749, the highest since September.

Ethylene and Paraxylene

Demand for spot ethylene in Asia will remain modest, triggered by persistent production shortfalls due to
lower run rates at olefins plants in China in late December. Any further rise in price may see more deepsea
supplies heading towards Asia which may moderate spot prices. In Europe, ethylene December contract was
fully settled at Euro1,057 a ton, representing increase of Euro32 on the month. Participants were expecting
the hike given the higher cost of naphtha. However, supplies will remain plentiful during the month, with high
run rates and de-stocking as 2017 draws to a close, prompting spot to ease. US spot ethylene will continue
dropping as crackers ramp up run rate after the onslaught of hurricane Harvey while downstream were still
lagging to mop up increased availability. This may trigger cargoes rushing to east.
Asian paraxylene contracts for December were nominated flat to up with Idemitsu Kosan at US$980 a ton and
S-Oil pegging at US$950 a ton. Other offers were heard at US$950-980 a ton. Spot may tend to give back and
reverse the 5-month rising streak. Sentiments may remain firm for the month, with planned startups of new
downstream PTA units. In US, November paraxylene contract price settled at US cents 44.50 per pound, up
US cents 1.50 from October. For December, mixed xylenes may be pressured down as demand from
derivatives will be limited amid length in paraxylene market. Spot paraxylene prices may slide as length is likely
to continue into December. In Europe, paraxylene contract for November settled up Euro20 at Euro765 a ton.
The higher settlement may prompt spot prices to turn bullish amid the rise in upstream prices.

PTA, MEG and PET Chip

MEGlobal, a major MEG producer, announced December MEG Asian Contract Price at US$1,060 a ton, up
US$30 from November and much higher than the rise in spot prices. But December may see spot giving back
November gains. In Europe, November MEG contract settled at Euro930 a ton as spot went stable-to-soft on
balanced conditions. Demand is expected to pick up in 2018 while players see a repeat of the uptrend of
previous year when prices started rising mid-December in 2016. However, bearish sentiment will remain in
the market because of a second successive mild winter will dampen demand for anti-freeze. Producers await
full-blown winter weather hitting Europe for demand to increase. In US, MEG supply will remain ample amid
slowing demand conditions in December, prompting fall in contract prices, but exports are expected to
pressure prices up in December. November contracts were at US cents 41-47 per pound, down US cents 2.
 There will be some demand coming from the de-icing and antifreeze sectors with the onset of the winter
season, but overall demand will be slow with the ending of peak PET season.
Asian PTA markets will eye on units going offline and new units and restarts of long-idled units, but overall
supplies will remain tight. Spot value may ease as end-users will be generally cautious. However, with
polyester producers raising their prices on the back of stronger PTA, may help PTA prices to remain elevated.
In US, PTA price for November increased US cent 1 to US cents 44.98 per pound from October, based on the
formula-based price after a rise in the November paraxylene contract. December may remain flat. European
PTA price will be relatively stable despite PKN declaring force majeure in November. But there were no signs
of shortage as others filled the short-term void. Indorama’s ramp up appears taking much time than expected.
And if it comes up speedily, then Europe would be in a longer position than seen currently.
Polyester chip markets in Asian will move in a narrow range and prices may edge down on the back of range-
bound feedstock and moderate demand. It may extend the dip of end November as cost changed. European
polyester fibre chip prices ended November up Euro4 a ton on October. December may slight reversal. In US,
fibre chip prices were range bound in November on the late settlement of raw materials. Domestic pricing of
fibre chip will remain on a rollover in December from the revised November pricing based on forecast.

PFY

Polyester filament yarn in Asia remained strong even after the peak season activity for winter clothing. And
this strength in demand was across all PFY specs and beyond the expectation of many players. Prices are
expected to remain firm since majority of producers had low inventory amid firm demand. Despite some
softness expected in feedstock prices in December, filament prices will remain stable to soft. In US, polyester
filament market will be mixed in December, depending on the segment., Demand for roofing and duct tape
will be strong due to hurricane rebuilding efforts, while apparel and auto applications will be weak. Domestic
POY and DTY prices are set to remain unchanged in December as quarterly pricing with raw material for Q4
prices have already been increased. European PFY demand will be steady despite slower car build numbers,
dragged down by low activity in UK. Polyester raw materials remained effectively flat in November as
expected. Both PTA and MEG will show some sobering in December values supporting PFY prices to remain
largely stable during the month.

PSF

Asian markets for PSF was buoyant in November and prices for all types were up. Virgin hollow staple prices
were rising because of limited supply of R-PSF. R-PSF producers had already shifted some capacity to higher
value-added products such as wool type staple, which is blended with wool into wool/polyester blended spun
yarns. It is expected that virgin PSF prices will remain firm in December due to limited availability and
continuing demand for winter products.
In US, the Department of Commerce has determined that producers and exporters of below 3D PSF were
subsidised by their governments in China and India, and have issued preliminary countervailing (CVD) duties.
 Domestic spinning staple prices generally moved down US cent 1 in November, while low melt was up US cent
1 per pound. December may see slight edging down due to slow demand and range bound raw material.
European PSF demand remained firm and all available capacity was full demand from auto and hygiene
markets performing well in November. Buyers were finding Asian suppliers less accommodating and on
broader developments, were arguing for a higher share of home sourcing. Given the current split of 65 import
and 35 domestic supply, even a small shift in sentiment may boost local prospects in December. PSF supplier
pricing will continue to creep down slowly as new deals and contracts were opened, but no room to
synchronise upwards.

Ban on waste in China will boost demand for virgin fibre

With ban on imports of waste plastics in China just a few weeks from now, it is poised to support demand for
virgin fibre, a phenomenon seen by a number of petrochemical company heads at the GPCA conference in
Dubai. "It is helping virgin demand," Equate CEO said and expect its global polyethylene sales grow of 5-6%
next year, as against 5% in 2017. Borouge PTE's CEO shared similar sentiment, adding that it would lead to a
reshuffling of the horizon.
On the occasion CEO of Sabic stated that China will contribute 50% of the global incremental petrochemical
demand growth till 2025. However, the push for plastics self-sufficiency is a threat, only ethylene will be
insufficient in China, but for how long.
China is set to ban imports of waste plastics from 2018. It has been the largest importer of waste globally.

1300 1300
PTA Price Trend MEG Price Trend
1100 1100

900 900

700 700

500 500
D J F M A M J J A S O N D J F M A M J J A S O ND (P)
US$/ton
US$/ton

D J F M A M J J A S O N D J F M A M J J A S O ND (P)
2016 2017
2016 2017
Asia USA Europe Asia USA Europe
 2000 2.50
PET Chip Price Trend PSF Price Trend
2.00
1500
1.50

1000
1.00

500 0.50
D J F M A M J J A S O N D J F M A M J J A S O ND (P) D J F M A M J J A S O N D J F M A M J J A S O ND (P)

US$/kg
US$/ton

2016 2017 2016 2017

Asia USA Europe 5.00 Asia USA Europe
2.75 POY Price Trend Textured Yarn Price Trend
4.00
2.25
3.00
1.75

2.00
1.25

0.75 1.00
D J F M A M J J A S O N D J F M A M J J A S O ND (P)

US$/kg
D J F M A M J J A S O N D J F M A M J J A S O ND (P)
US$/kg

2016 2017 2016 2017

Asia USA Europe Asia USA Europe

Global Polyester Price Forecast

Nov-17 Dec-17 Mar-18 Jun-18
Product / Specs Market Unit % YoY % YoY % YoY
Actual Forecast Most likely Tentative
Naphtha Japan CFR US$/ton 585 573 19.3 541 16.0 503 23.3
Naphtha US Gulf US$/ton 472 463 17.5 438 14.0 408 21.0
Naphtha Rotterdam US$/ton 449 440 17.9 416 11.9 388 17.3
Ethylene Korea FOB US$/ton 1,291 1,285 12.7 1,271 6.5 1,252 32.5
Ethylene US Gulf US$/ton 611 599 7.1 568 -8.1 532 7.9
Ethylene Europe Del US$/ton 816 814 12.9 808 -1.8 800 2.3
Paraxylene Korea FOB US$/ton 881 865 4.0 823 -2.6 775 1.1
PTA Korea/Taiwan FOB US$/ton 705 695 9.5 667 0.1 636 1.7
PTA US Del US$/ton 970 962 1.9 940 -6.2 914 -1.6
PTA Europe Del US$/ton 972 962 19.7 934 -16.3 901 -6.3
MEG Korea/Taiwan FOB US$/ton 926 919 4.4 900 14.9 878 11.3
MEG US FOB US$/ton 1,079 1,073 16.1 1,057 -10.7 1,037 12.2
MEG Europe FOB US$/ton 1,119 1,111 37.6 1,089 -1.6 1,062 10.0
PET Chip SD Taiwan FOB US$/ton 1,047 1,035 10.0 1,005 -1.0 970 11.0
PET Chip US Del US$/ton 1,499 1,490 7.3 1,466 -4.0 1,437 5.1
PET Chip Europe Del US$/ton 1,202 1,188 18.5 1,151 -4.3 1,108 -1.2
PSF 1.4D/38mm Korea/Taiwan FOB US$/kg 1.21 1.20 15.5 1.16 9.7 1.12 15.5
PSF 1.2/1.5D SF US Del US$/kg 1.94 1.93 4.3 1.91 -2.1 1.88 2.4
PSF 1.7dtex SF Europe Delivered US$/kg 1.81 1.79 19.9 1.76 4.9 1.72 2.5
POY 75D FE Asia (C&F) US$/kg 1.42 1.41 14.2 1.38 7.7 1.35 13.2
POY 70D US Del US$/kg 2.49 2.48 4.7 2.47 -1.3 2.46 0.6
POY 167 dtex Europe Del US$/kg 1.78 1.77 21.9 1.74 6.5 1.70 3.2
Textured Yarn 150/48 FE Asia (C&F) US$/kg 1.46 1.45 8.5 1.42 5.1 1.38 9.0
Textured Yarn 150D US Del US$/kg 2.53 2.53 5.8 2.52 -1.9 2.50 -1.2
Textured Yarn 167 dtex Europe Del US$/kg 4.40 4.37 17.6 4.28 4.2 4.19 0.0
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