Weaker-than-expected polyester and PTA

Though crude oil and PX prices hiked in early Oct, polyester sales were lackluster. The sales ratio increased to 110-120% only on Oct 8, but dropped to below 40% on Oct 10. Even the rise in crude oil price was not able to drive down product inventory in polyester plants. With high inventory, some large plants resorted to cutting production.

PTA market was also weaker than expected. Some participants had earlier anticipated that PTA futures could rise to hit daily upper limit on the first trading day after the holiday, but in fact, PTA futures contract was much weaker than anticipated. Afterwards, with some polyester plants reducing production and crude oil declining, PTA spot to futures spread narrowed drastically, and the processing spread also squeezed sharply.