Chemical Futures Perform Poorly on Less Demand
SHANGHAI, Jul 20, 2010 (SinoCast Daily Business Beat via COMTEX) --
Copyright 2008 SinoCast Daily Business Beat. All rights reserved
Prices of chemical futures in the Chinese market continued dropping recently due to slid prices of crude oil futures and ethylene monomer.
Hurt by decrease in the international oil price, such futures opened low on the morning session on July 19, with plastic futures and PVC futures on the Dalian Commodity Exchange (DCE) as well as PTA futures on the Zhengzhou Commodity Exchange (ZCE) reaching a new low on the trading day. In detail, main contract of LLDPE futures on the DCE closed at CNY 9,175 per ton, down 0.27 percent from the previous colse. That of PVC futures inched up by 0.29 percent to close at CNY 6,860 per ton. And the figure of PTA futures on the ZCE closed at CNY 7,036 per ton, up 0.77 percent.
Chemical futures perform poorly this year. For instance, plastic futures on the DCE stood at a record low of CNY 9,060 per ton yesterday, compared to CNY 11,900 per ton in April; PTA futures on the ZCE declined from CNY 8,766 per ton in April to a new low of CNY 6,920 per ton on Monday. PVC futures on the DCE dropped about 16 percent to a record low of CNY 6,790 per ton from CNY 8,090 per ton in April.
The poor performance of PVC futures should be mainly attributed to large stockpile and less demand. Available statistics show that the nation's PVC output was 987,000 tons in June, up 1.65 percent month on month and 10.3 percent year on year. The figure for the first half of the year was about 5.54 million tons, soaring 17.2 percent from a year ago. However, tightened restrictions on the domestic real estate market and unsatisfactory export environment both have resulted in the demand shrinking. In addition, decreasing raw material price and market's worries about the second-half macro economy should be responsible for the poor performance of chemical futures.
"It is a tough job for such futures to rebound in the second half of the year," said Jiang Chanjie, an analyst with GF Futures Co., Ltd. "Their performance will be closely tied with the macro economy, however, the domestic economy began slowing down as from the second quarter of the year and the trend is likely to maintain in the following months." "PTA futures' poor performance will continue provided that oil price does not rebound sharply," stressed Lu Hui, an analyst with Jiangsu Suwu Futures Brokerage Co., Ltd.
(USD 1 = CNY 6.77)
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