march 2011 china report

8/6/2019 March 2011 China Report

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Issue Number 102

March 2011

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Information contained in this report is obtained from sources believed to be reliable, however

no responsibility nor liability will be accepted by China Chemical & Fiber Economic

Information Network ( CCFEI ) for commercial decisions claimed to have been based on the

content of the report.

Reproduction of any part of this work by any process whatsoever without written permission

of China Chemical & Fiber Economic Information Network ( CCFEI ) is strictly forbidden.

Paraxylene

PTA

MEG

Bottle Grade PET

Fiber Grade PET

Polyester Filament

Recycled PSF

Caprolactam

ABS

Acrylic Fiber

Acrylonitrile

Spandex

MDI/PTMEG

Nylon Filament

Nylon Chips

Viscose Feedstock

Viscose Staple

Viscose Filament

Polyester Staple

Propylene

CCaattaalloogguuee ooffCCCCFFEEII CChhiinnaa RReeppoorrtt (( MMoonntthhllyy ))

Click me

DisclaimerInformation contained in this report is obtained from sources believed to be

reliable. However, neither responsibility nor liability will be accepted by China Chemical &

Fiber Economic Information Network (CCFEI) for commercial decisions claimed to have

been based on the content of the report.

Reproduction of any part of this work by any process whatsoever without written permission

of China Chemical & Fiber Economic Information Network (CCFEI) is strictly forbidden.

Refund: In case that CCFEI can not provide the data consistently and would cease updating

it before subscription expires, subscriber will get his/her payment for the balance of

subscription period refunded.


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China Chemical & Fiber Economic Information Network www.ccfei.net March 2011 [PX]

ParaxyleneContract Price (Yuan/ton or $/ton)

Month Change Price One month ago

Mar settled 450 13500 13050RMBApr listed 400 13500 13100

Mar settled 35 1655 1620USD

Apr listed 50-80 1800-1810 1730-1750

700080009000

1000011000

120001300014000

Sep Oct Nov Dec Jan Feb Mar

900

1050

1200

1350

1500

1650

RMB USD

JX Nippon Oil & Energy, ExxonMobil, Idemitsu Kosan and Korea S-oil settled March Asian PX contract prices at$1,655/ton, up by $35/ton from February. Asian contract nominations for April came out as well, in the range of$1,800-1,810/ton (CFR, L/C 90 days), up by $50-70/ton from March.

Sinopec issued its PX contract settlement for March at 13,500 yuan/ton, up by 450 yuan/ton from February.Contract nominations for April were released at 13,500 yuan/ton, 400 yuan/ton higher over last month.

Spot Average Price ($/ton)

Week Date USDWeek 1 28Feb-4Mar 1668

Week 2 7Mar-11Mar 1643


Week 4 21Mar -25Mar 1772

Week 5 28Mar-1Apr 1706

Monthly Ave. in Mar 1713

1200

1300

1400

1500

1600

1700

1800

5Nov 10Dec 14Jan 25Feb 1Apr

PX spot market showed upward corrections in March.

In the first week, PX market showed a correction. Bids for one deal of April cargoes were at $1,665-1670/ton.

However, due to surges of downstream PTA prices, many sellers closed their offers. Due to the expectation of PX

oversupply in March and April, when 5 big PTA plants in China, Korea and India would be idled for turnaround, marketprices moved down slightly, with bids at $1,652/ton CFR on weekend.

In the second week, the market sustained downtrend, with several deals of April cargoes changing hands at

$1,650-1,655/ton CFR. Beside, there were two deals of April cargoes done at $1,625-1,630/ton CFR. CPC Corporation,

Taiwan bought 10,000 tons of PX cargoes delivered in H2 April by the tender, with one Japanese trader and one Korean

trader selling 5,000 tons respectively. It was heard that Urumqi Petrochemical exported its first parcel of PX by rail.

In the third week, given FM on some PX plants resulting from the earthquake in Japan, PX prices surged and set a

new record high. It was reported that four deals of cargoes were traded at $1,800/ton, and two were traded at

$1,810/ton, while another four were concluded at $1,815/ton. Offers for one April cargo were at $1,840/ton CFR.

Stepping into weekend, prices inched down slightly before surging up, with one April cargo traded at $1,780/ton CFR.

In the fourth week, the market showed a weak correction. Panic stemming from earthquake in Japan dissipated.Southeast Asian cargoes were enough to dissipate the pressure from tight supply. Offers for 5000-ton cargoes for

April were heard at $1,770-1,775/ton CFR.

In the fifth week, prices remained in the downtrend. One May cargo was offered slightly lower to $1,680/ton CFR

from $1,705-1,710/ton CFR, but no buyer responded. Two deals of April cargoes were done at $1,690-1,700/ton CFR.

Monthly International PX Value Trend

Asia (CFR China, USD/ton) Europe (/ton, FD) USA (cts/lb, DEL)

Feb Mar Apr est. Feb Mar Apr est. Feb Mar Apr est.

1620 1655 1230 1270 82.00 84.75-85.5

In European market: March PX contract price was settled at 1,270/ton, up by 40/ton from February; Middle

East materials were heard delivered into Europe market. One trader said 25,000 tons of cargoes from Oman, Indonesiaand India would arrive in Spain and Turkey in March and April. In US market, March contract price was settled at84.75-85.50 cts/lb. Following the earthquake and tsunami in Japan, Asian PX prices surged, followed by US prices. Spotprices jumped from $1,760-1,765/ton in early March to $1,800-1,805/ton FOB USG.

Y/T $/T

$/T


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China Chemical & Fiber Economic Information Network www.ccfei.net March 2011 [PX]

Statistics on PX Imports in China (kt, $/ton)

Jan 2011 Feb 2011 Jan-Feb 2011 Jan-Feb 2010Origin

Imp. Vol. Ave. Val. Imp. Vol. Ave. Val. Imp. Vol. Ave. Val. Imp. Vol. Ave. Val.

South Korea 89.4 1304 59.6 1476 149.2 1373 119.8 1105

Taiwan 58.5 1413 53.9 1663 112.4 1533 25.1 1091

Japan 109.8 1375 82.5 1572 192.2 1461 145.8 1115

Indonesia 24.3 1263 29.5 1487 53.8 1386 55.3 1102

Thailand 30.4 1275 25.1 1606 55.4 1425 44.0 1113

Others 70.9 1349 84.9 1448 155.9 1403 153.9 1098

Total 383.3 1344 335.6 1533 718.8 1433 544.0 1105

Customs statistics showed that Chinas PX import volume was 335.6kt in February, down by 47.7kt from January.

The average import price in February was at $1,533/ton, up by $189/ton on month.

Chinese enterprises mainly purchased term goods. Japan, South Korea and Chinese Taiwan are the major sources

for PX imports into China Mainland in February, with volumes at 82.5kt, 59.6kt and 53.9kt respectively, accounting for

24.58%, 17.76% and 16.06%, and the combined imports from the three accounts for 58.4% of the total. Import volume

from any other origin is all below 40kt.

The combined import volume in February 2011 amounts to 718.8kt, up 174.8kt year on year. The average import

price was at $1,433/ton, up by $328/ton or 29.68% year on year.

Operation Status of PX Producers

Global Plant

Operation

JX Nippon Oil & Energy declared force majeure (FM) on the supply of PX from 15 March to 30 April,

and reduced supply by half after they shut down units in Kawasaki and Kashima following the earthquakeand tsunami in Japan. The two plants have a combined nameplate capacity of 95kt/yr.

In China Jan Feb Mar Apr est.

Run rates 75% 78% 75%

Output (kt) 481.2 500.4 481.2

According to CCFEIs statistics, Chinas PTA production in February is about 1,212.9kt, which reflects a demand of

788.4kt for PX. Based on operating rates of Chinese PX enterprises, February PX production should amount to 500.4kt.

The total PX export volume in February is 43kt, and total import volume hits 335.6kt. According to these data, the

supply in February is 793kt, a little more than demand. (It was heard that PX from new plants of Urumqi Petrochemical

started to be delivered gradually.)

CCFEI Comment

Feedstock: Crude values soared up to above $100/bbl, and is expected to hike and remain in uptrend given unstable

global situation. Additionally, with naphtha and MX prices also at high levels, PX can get some support from feedstock

costs.

PX supply: The recent earthquake in Japan led to FM of some units, so overall supply dropped significantly.

Downstream demand: Since many PTA units in Asia would be shut down next month, demand for PX will decrease.

To sum up, Issues in Japan could not be solved in the short term. Besides, players in Europe and US were very

buoyant. In Asian market, there were still European end users who inquired for April cargoes, and some India cargoeswere delivering into US gulf across Atlantic Ocean. Thus, due to overall tight supply, it is hard for PX prices to slump in

future.


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China Chemical & Fiber Economic Information Network www.ccfei.net March 2011 [PTA]

PTAContract Price (yuan/ton, $/ton)

Change Range Prev. Month

Settled for Mar 50-50 11900-12000 11950RMBNominated for Apr 0-100 12000-12100 12000

Implemented for Mar USD

Nominated for Apr

8000

9000

1000011000

12000

13000

Oct Nov Dec Jan Feb Mar

RMB

RMB-based contract market: Several domestic major suppliers settled PTA contract prices for March basically

at 11,900-12,000 yuan/ton, with individuals a little higher than market expectation. Their contract nominations for April

came out at 12,000-12,100 yuan/ton, up by 0-100 yuan/ton from the nominations for March.

Weekly Average Spot Price (yuan/ton, $/ton)

Week Time RMB-based USD-based

Week 1 28Feb-4Mar 11696 1505

Week 2 7Mar-11Mar 11556 1504

Week 3 14Mar -18Mar 11490 1512

Week 4 21Mar-25Mar 11602 1528

Week 5 28Mar-1Apr 11380 1490

Monthly Ave. in Mar 11545 1508

7000

8000

9000

1000011000

12000

17Sep 5Nov 10Dec 14Jan 25Feb 1Apr

900

1000

1100

1200

1300

1400

1500

1600

RMB USD

USD-based spot market: PTA prices saw a mild uptrend amid correction in March.

In early March, pushed by cotton futures, PTA futures showed an uptrend, so players had better mood, driving spotprice up as well. Offers for Taiwan cargoes rose to $1,530/ton from $1,490, while trading prices went up to $1,510-

1,520/ton. Afterwards, as buyers showed resistance to the high prices, spot market weakened. However, given a littletight supply of cargoes, price downtrend slowed down, with offers for Taiwan cargoes down to $1,505-1,510/ton andtalks at $1,500/ton. In mid March, the earthquake in Japan influenced production of some local PX plants, so someshipments were delayed. Thus, PX surged up, and set a new high. Backed by this situation, PTA prices also climbed up,with sporadic offers for some Taiwan cargoes up to $1,550/ton. Since downstream polyester sector could not follow up,however, mainstream talks for PTA only hit $1,530-1,535/ton. Till the last week of March, due to slumps of PTAfutures, PTA spot market showed a downtrend, with major talks down to $1,460/ton.

RMB-based spot market: The market took the similar trend to USD-based market.

In early March, the market showed an uptrend, with major talks up to 11,750-11,800 yuan/ton from 11,550-11,600

yuan/ton. Trades were limited, as some sellers held materials tight. The uptrend did not last long. Influenced by

dropping PTA futures and overall polyester sector, RMB-based market showed a weak trend, with major talks down to

11,400-11,450 yuan/ton. In light of limited spot PTA, both buyers and sellers held their positions. Downtrend of PTAspot market was slower than that of PTA futures market because of tight supply, and spot PTA prices were higher than

PTA futures. Stepping into mid March, as some downstream users purchased PTA at a result of low prices, and also

driven by soaring PX prices, PTA prices climbed up slowly, with major talks up to about 11,600 yuan/ton. By the month

end, however, pulled down by PTA futures, major talks went down to 11,200-11,300 yuan/ton.

Monthly International PTA Value Trend

Asia ($/ton, CFR) Europe (/ton, FD) USA (cts/lb, DEL)


1038-1048 68.58-68.68

In Europe, restart of some BP plants slightly relieved tight supply, but downstream PET producers were also

intending to raise run rates.

In USA, PX prices firmed up on tight supply. As a result, it was expected that PTA contract prices would be close

to 70.5 cts/lb.

Y/T

Y/T$/T


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China Chemical & Fiber Economic Information Network www.ccfei.net March 2011 [PTA]

Statistics on PTA Imports in China (kt, $/ton)Jan 2011 Feb 2011 Jan-Feb 2011 Jan-Feb 2010

OriginImp. Vol. Ave. Val. Imp. Vol.

Ave.

Val.Imp. Vol. Ave. Val. Imp. Vol. Ave. Val.

S. Korea 172.4 1225 113.1 1402 285.5 1295 315.4 945

Taiwan 224.7 1224 173.2 1368 398 1287 379.8 954

Japan 12.2 1235 9.6 1378 21.7 1298 44.4 940

Thailand 54.4 1184 33 1388 87.4 1261 91.3 940

Others 2.8 1143 4.1 1371 6.8 1279 8.2 870

Total 466.5 1219 333 1382 799.4 1287 839.2 947

QTA/EPTA 114.8 1202 60.7 1347 175.5 1255 170.5 916

According to Customs statistics, Chinas import volume for terephthalic acid in February totaled 393.7 kt, down by187.6 kt from January. The average price for imported terephthalic acid declared to the Customs was at $1,377/ton,up by $161/ton from previous month. Chinas import volume for PTA (tariff number: 29173611) in February totaled 333kt, down by 133.5 kt from January. The average price for imported PTA was at $1,382/ton, up by $163/ton fromprevious month. Chinas import volume for QTA/EPTA (tariff number: 29173619) in February totaled 60.7 kt, down by54.1 kt from January. The average price for imported QTA/EPTA was at $1,347/ton, up by $145/ton month on month.

By import volume into China, the first three countries and regions of the month are Chinese Taiwan, South Koreaand Thailand. The volume from Chinese Taiwan is 173.3 kt (with PTA 173.2 kt), occupying 44.02% of the total. Thevolumes from South Korea and Thailand are 168.8 kt and 33.5 kt (with PTA 113.1 kt and 33 kt), amounting to 42.88%and 8.51% of the total respectively.

Average cost of domestic stocks of PTA was around 11,444 yuan/ton in February (by exchange rate of 6.58), up by1,467 yuan/ton from January.

Stock Status and Operation of Chinese PTA Producers in China

1. One 800kt/yr PTA plant at FCFC (Ningbo) was restarted on 5 Mar, which was shut down on 28 Feb.

2. One 600kt/yr EPTA plant at Yuandong Petrochemical was restarted in late Mar, which was shut down

on 2 Mar. Its No 2 PTA plant was also idled in late Mar.3. One 900kt/yr PTA plant at Pengwei Petrochemical was restarted on 19 Mar, which was shut downunexpectedly on 16 Mar.

Plant News

4. Yuandong Petrochemical, Ningbo Mitsubishi, Tianjin Petrochemical and Yisheng Petrochemical plannedto shut down PTA plants for turnaround in Apr-May.

Jan Feb Mar Apr est.

Operatingrate

95% 95% 85%

Output (kt) 1,212.9 1,212.9 1,139.1

Stock Status Low Low Low

According to estimation made by CCFEI, China's productions of polyester filament, staple and fiber-grade chips in

February amount to about 1,290 kt, 395.1 kt and 197 kt respectively. Production of polyester for non-fiber use is 251kt. Thus, production of PET melt is estimated at 1,936.1 kt, with demand for PTA at 1,645.7 kt. Import volume of PTAin February amounts to 393.7 kt, while export volume is 0.5 kt. Domestic PTA production in March is 1,212.9 kt basedon CCFEIs statistics. Thus, PTA supply is at 1,606.1 kt, which is slightly lower than demand.

CCFEI Comment

Feedstock: Crude value hiked to above $100/bbl and is likely to trend up further given unstable global situation. As

for PX, supply was tight in general caused by the disaster in Japan, and it is probable for PX prices to stay high or go

up, which offers some support for PTA.

Supply: Many domestic PTA units will be idled in April, and some Korea-origin cargos were shipped to India, Europe

and US, so overall supply will reduce.Demand: As sale/production ratios of downstream PET producers were not sound, many PET units were shut down

for turnaround. Meantime, power rationing is being implemented, which will influence the operation of textile sector andin tern impact demand for polyester fiber.

To sum up, PTA market saw a stalemate recently when both upstream and downstream players held their

positions. But favorable factors seem in dominant position, so prices are likely to go up moderately in the short run.


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China Chemical & Fiber Economic Information Network www.ccfei.net March 2011 [MEG]

MEGContract Prices from Majors (yuan/ton, $/ton)

Month Up/down Range Pre. month

March Settled 300 9950 10250RMB

April Nominated 350 9950 10300

March Settled USD

April Nominated 1350-1400 1350-1400

6000

7000

80009000

10000

11000


800

900

1000

1100

1200

RMB USD

USD-based market: Sabic, Shell and MEGlobal nominated their Asian contract prices for April at $1,350-1,400/ton(CFR, L/C 90 days), flat to March.

RMB-based market: Sinopec settled its March contract price at 9,950 yuan/ton, down by 300 yuan/ton fromFebruary, and announced its April contract price at 9,950 yuan/ton, down by 350 yuan/ton on month.

Average Spot Price (yuan/ton, $/ton)

Week TimeRMB-

basedUSD-

based

Week 1 28Feb-4Mar 9,610 1,217

Week 2 7Mar-11Mar 9,744 1,246

Week 3 14Mar-18Mar 9,900 1,257

Week 4 21Mar-25Mar 9,558 1,212

Week 5 28Mar-1Apr 9,180 1,167

Monthly Ave. Ave. in Mar 9,599 1,220

55006000650070007500800085009000950010000

17Sep 5Nov 10Dec 14Jan 25Feb 1Apr

700

800

900

1000

1100

12001300

RMB USD

USD-based market: Prices hiked first and then began to fluctuate down.

In early March, driven by the surge of PTA futures, MEG market was in uptrend, with offers up from $1,250/tonto $1,270/ton and trading prices up from $1,245/ton to $1,260/ton. However, the rise came to an end quickly after toofast hike due to high domestic inventory and sellers offloading under tank pressure but low buying interest. In midMarch, mainstream negotiations dropped to $1,200-1,205/ton, while driven by strong PTA market, mainstreamnegotiations edged up to $1,215/ton. However, price hikes were hard, as buying interest was not strong. Entering thelast week of March, MEG prices move down, with mainstream negotiations down to $1,122/ton due to the dive of PTAfutures.

RMB-based market: RMB-based market mirrored the trend on the USD-based market.

In early March, MEG market was bullish, with offers up from 9,850 yuan/ton to 10,000 yuan/ton and mainstreamtrading prices up to 9,950/ton. With high-position price approaching 10,000 yuan/ton mark, buyers follow-upmomentum weakened, and prices inched down due to inventory pressure. In mid March, mainstream trading prices

dropped to 9,600-9,650 yuan/ton. Driven by strong PTA futures, offers were tentatively hiked to 9,700 yuan/ton, butthe bullish market weakened gradually. In the last week of March, MEG market tended to fall, with mainstreamnegotiations at 8,800-8,850 yuan/ton, and overall trades were hard to be concluded given low buying interest.

Monthly International MEG Value Trend

Asia ($/ton, CFR China) Europe (/ton, FD) USA (cts/lb, DEL)


1,070 1,130 51.00-52.00 57.00-58.00

In Europe, initial contract price for March was settled at 1,130/ton FD NEW between Arteco and Ineos, up by

60/ton from February. Spot market weakened after corrections.

In US, prices fluctuated. By the month end, cargoes were traded at 55-56 cts/lb FOB USG.

Y/T $/T

$/TY/T


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China Chemical & Fiber Economic Information Network www.ccfei.net March 2011 [MEG]

Statistics on MEG Imports in China (kt, $/ton)Jan. 2011 Feb. 2010 Jan.-Feb. 2011 Jan.-Feb. 2010

OriginImp. Vol. Imp. Val. Imp. Vol. Imp. Val. Imp. Vol. Imp. Val. Imp. Vol. Imp. Val.

Saudi Arabia 314.8 1055 187.8 1147 502.6 1097 423.1 899

Chinese Taiwan 124.0 1080 82.4 1184 206.4 1122 176.2 937

South Korea 29.1 1084 21.0 1209 50.4 1137 74.1 950

Canada 49.2 1057 15.9 1211 65.1 1097 90.6 931

USA 61.6 1031 30.2 1147 91.8 1075 69.7 930

Others 83.9 1107 55.9 1146 139.8 1124 169.5 913

Total/Ave. Val. 662.6 1066 393.2 1160 1055.9 1106 1003.2 917

According to statistics from China Customs, Chinas MEG imports in February 2011 totalled 393.2kt, down by269.4kt on month; and the average price declared to China Customs was at $1,160/ton, an increase of $94/ton fromJanuarys $1,066/ton.

In February, 373.2kt of MEG was imported from other Asian countries or regions, down by 240.2kt from Januaryand accounting for 95% of the total. Hereinto, the volume from Saudi Arabia ranked the first at 187.8kt, down by127kt from Januarys 314.8kt and accounting for 47.761% of the total; Taiwan and Singapore followed, with volumes of82.4kt and 30.2kt respectively.

As for deep-sea cargoes, import volume from Canada in February decreased 33.33kt month on month to 15.9kt,taking up 4% of the total. Import volume from U.S. was 4.1kt, taking up 1% of total. Import volume from othercountries was nearly zero in February.

In February, the average cost (based on the USD versus RMB exchange rate 1: 6.58) for stocked MEG was around9,602 yuan/ton, up by 738 yuan/ton from the average cost declared to China Customs in January.

Stock Level and Operation Status of MEG Producers

Plant News Shell issued force majeure on its 750kt/yr MEG unit at Singapore due to ethylene productionoutage.

Jan. Feb. Mar. Apr est.DomesticOperating Rate 90% 87% 85%

Production (kt) 275.0 265.8 259.6

Stock Level Mid-high High High

According to the assessment by CCFEI, the productions for PFY, PSF, fiber-grade PET chips and non-fiber gradeones in February respectively totalled 1,290kt, 395.1kt, 197kt and 251kt. Based on these, total production of polyestermelt during the month reached 1,936.1kt, with demand for MEG at around 658.3kt. Import volume of MEG in February

was 393.2kt and export volume was 0.1kt. Besides, according to CCFEIs statistics, domestic MEG production reached265.8kt in February. Based on above data, MEG supply totalled 658.9kt in February, basically flat to demand (somesurplus supplies are to meet demand from antifreeze sector).

CCFEI Comment

Upstream: Crude values hiked to above $100/bbl and are likely to jump further on global unrest. Meanwhile,ethylene prices saw high-level corrections recently, which offered moderate cost support for MEG market.

Supply: Stocks were high, as sellers held back sales, expecting post-holiday market to be bullish.

Demand: Many downstream PET units are idled due to low sale/production ratios. Meanwhile, operation was

restricted, as power blackout was carried out gradually. Thus overall demand for polyester fiber and intermediates wasaffected.

To sum up, short-term MEG market is likely to make soft corrections due to inventory pressure.


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China Chemical & Fiber Economic Information Network www.ccfei.net March 2011 [BGPET]

BGPET ChipNominations from Majors (yuan/ton)

Specifications

Time Water BGPET(W) Hot-fillingBGPET (H) Soft-drinkBGPET (S)

Jan 13500 13600 13700

Feb 14600 14700 14800

Mar

5000

7000

9000

11000

13000

15000

Oct. Nov. Dec. Jan. Feb. Mar.

W H S

Y/T

Spot Price Water Bottle Grade (yuan/ton)Time Price On week







8000

9500

11000

12500

14000

15500

29Oct 10Dec 14Jan 25Feb 1AprY/T

RMB-based market: BGPET chip market inched up amid fluctuations.

Early in Mar, BGPET chip market saw both prices and liquidity up on the support of cotton and crude oil surges.Mainstream offers for water grade rose to 14,300-14,400 yuan/ton (ex-works or delivered within a short distance),with low-end numbers slightly above 14,100 yuan/ton and high-end values at 14,500-14,600 yuan/ton. Traders continuedto take in moderate and small quantities and there were two large parcels (more than 10kt in total) changed hands earlyin the month between an East China supplier and two major users at 14,100 and 14,250 yuan/ton respectively. Then themarket saw fluctuations as stock and futures markets headed down on expectation of deposit reserve ratio increase.

In Mid Mar, Asian PX surged for 3 successive days on outages of 950kt/yr PX capacities in Japan resulted fromearthquake, while negative influences on global stock market and softening US cotton sent China TA market intoinstability, and BGPET market went stable-to-soft.

At month end, though PTA and MEG were settled high at 12,000 yuan/ton and 9,950 yuan/ton respectively,mainstream talks of BGPET chips remained between 14,100-14,300 yuan/ton ex-works.

USD-based Market: USD-based market remained firm.

Early in the month, mainstream offers of USD-based BGPET chip market rose to $1,850/ton FOB CMP from$1,830/ton, and to $1,880/ton FOB CMP in mid Mar as PX surged due to Japans earthquake, while talks rose to

$1,860/ton FOB CMP. At month end, mainstream offers were between $1,870-1,880/ton FOB CMP and talks werebetween $1,850-1,870/ton FOB CMP though the market began to soften as demand weakened as a result of lack ofpotable water in Japan.

Monthly International BGPET Value TrendEurope (/ton, FD) USA (cts/lb, DEL)

Feb 2011 Mar 2011 Apr 2011 est. Feb 2011 Mar 2011 Apr 2011 est.

1880-2215 2015-2315 86.71-96.21 94.21-96.21

Driven by high cost, European and American markets saw further price increases in Market. In Europe, overall runrates of PET units were cut to 60-80%, while those of plants in the US hovered at 90%. Prices are expected to continuewith the uptrend in Europe and the US next month on cost support.


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China Chemical & Fiber Economic Information Network www.ccfei.net March 2011 [BGPET]

Statistics on BGPET Exports in China (ton, $/ton)Jan 2011 Feb 2011 Jan-Feb 2011 Jan-Feb 2010

DestinationExp. Vol. Exp. Val. Exp. Vol. Ave. Val. Exp. Vol. Ave. Val. Exp. Vol. Ave. Val.

Russia 5775 1334 9576 1532 15351 1458 4662 1157

Ukraine 2100 1433 12408 1613 14508 1587 6174 1156Japan 8454 1451 6722 1592 15176 1513 15081 1179USA 2235 1550 4012 1603 6247 1584 6500 1196

Croatia 1680 1491 4158 1591 5838 1562 1071 1226

Others 18473 1464 21437 1586 39910 1537 35888 1198

Total 38717 1450 58313 1585 97030 1531 69376 1190

China imported 899 tons of BGPET chips in Feb, down by 56.6% from Jan. The average import price for Feb was at$1,752/ton, up 11.6% from Jan. China's export volume in Feb was 58,313 tons, up by 50.6% from Jan. The averageexport price for Feb was at $1,585/ton, up 9.3% from Jan. From above data we can see that Chinas export volume forBGPET is far larger than the import volume, with the net export volume of 57,414 tons, up 20,767 tons from Jan.

In Feb, among the destinations for China's exports, Ukraine ranked the first, with the volume taking up 21.3% oftotal. Russia took the second place at 16.4%, and Japan the third at 11.5%.

Stock and Operation Status of Chinese BGPET Producers

Plant NewsOne Jiangsu-based supplier restarted a long-idled 200kt/yr SSP plant after it had some specs

sold out.

Jan 2011 Feb 2011 Mar 2011 Apr 2011 est.Operating rate 68.9% 60.0% 70.8%

Output (kt) 288 251 296

Stock Level Slightly high High Normal

Compared with last month, inventory level in March fell on decent demand from home and abroad, with low levelbelow 10 days and high level between 21-30 days.

CCFEI Comment

Supply:Next month some suppliers who are now running at low rates are likely to raise run rates with the market

heading for toward busy season and overseas market remaining sound.

Demand: Players are quite sensitive to market changes recently given firm overseas demand and busy season

drawing near. Therefore, once the market shows sign of strengthening, trading volume is expected to increase instantly

boosted by players buy-up sentiment.

Cost: With Central Bank of China raising interest rates higher and talks about the 5 percentage points cut of

textile export rebate rate, it is getting difficult for prices to remain at current high level. On the other hand, the

scheduled TA of more than 5,000kt PTA capacities will continue to lend support to the market.

To sum up, unfavorable economic environment combined with sluggish fiber demand will continue to curb PET prices.

In H1 and mid Apr, PET market sentiment is expected to soften but there will be limited space for BGPET to go down,

and it is possible that TAs of PTA units will help to improve the market.


11/44

China Chemical & Fiber Economic Information Network www.ccfei.net March 2011 [FGPET]

FGPET ChipSettlements from Majors (yuan/ton)

Sinopec East China South China

Month SD Bright SD Bright SD Bright

Jan 12800 12650 12750 12750 12900 12850

Feb 13650 13550 13750 13750 13950 13950

Mar 13850 13700 13950 13850 14200 14100

9000

10500

12000

13500

15000

Oct Nov Dec Jan Feb MarY/T

Sinopec

East China

South China

Nominations from Majors (yuan/ton)

Sinopec East China South ChinaMonth

SD Bright SD Bright SD Bright

Jan 12,000 12,000 12,000 12,000 13,000 13,000

Feb 12,500 12,500 12,500 12,500 12,500 12,500

Mar 13,700 13,700 13,800 13,800 13,900 13,900

9000

10500

12000

13500

15000

Oct Nov Dec Jan Feb MarY/T

Sinopec

East China

South China

Spot Average Price (yuan/ton)Week Time SD On Week







8000

9500

11000

12500

14000

15500

29Oct 10Dec 14Jan 25Feb 1AprY/T

Semi Dull PET Chips: SD PET chip market in Zhejiang and Jiangsu ranged bound.

Prices firmed early in the month supported by US cotton and crude oil surge, with mainstream talks at 13,900-

13,950 yuan/ton (D/A 90 days) and low end at 13,800-13,850 yuan/ton (D/A 90 days). Then the market saw fluctuations

as stock and futures headed down on expectation of deposit reserve ratio increase.

In Mid Mar, Asian PX surged for 3 successive days on outages of 950kt capacities in Japan resulting from

earthquake, while negative influences on global stock market and softening US cotton sent Chinas PTA market into

instability, and FGPET market went stable-to-soft, which was also attributed to weak downstream demand resulting

from power rationing.

At month end, though PTA and MEG were settled high at 12,000 yuan/ton and 9,950 yuan/ton respectively,

mainstream talks of SD chips remained between 13,700-13,750 (D/A 90 days).

Super Bright PET Chips: SB chip market saw similar features as semi-dull chip market did. Early in the month

mainstream talks inched up to 13,500-13,800 yuan/ton (cash or D/A), then softened to 13,300-13,650 yuan/ton in mid

month. At month end talks were pegged between 13,300-13,600 yuan/ton (cash or D/A).

CDP Chips: CDP market experienced similar movements as the above two products did.

Trading prices for CDP chips softened to 14,700 yuan/ton D/A by the end of this month from 14,500 yuan/ton D/A

seen in early March.


12/44

China Chemical & Fiber Economic Information Network www.ccfei.net March 2011 [FGPET]

Statistics on FGPET Imports in China (ton, $/ton)


Imp. Vol. Imp. Val. Imp. Vol. Imp. Val. Imp. Vol. Imp. Val. Imp. Vol. Imp. Val.

Iran 1200 1450 0 0 1200 1450 1000 1105

Taiwan 3831 1561 1716 1550 5547 1558 1101 1189

S Korea 1525 1949 1776 1898 3300 1921 4947 1373

USA 2998 1186 1470 1231 4468 1201 2422 1011

Japan 1630 2046 1230 1855 2861 1964 2213 2103

Others 1954 1970 2513 1602 4467 1673 14567 1460

Total 13138 1629 8705 1799 21843 1697 26250 1324

Chinas total import volume of PET chips in Feb declined to 8,705 tons from Jan, down by 4,433 tons. Averageimport price in Feb was at $1,799/ton, up by $170/ton on month. Export volume decreased from 9,445 to ns to 5,707tons, down by 3,738 tons or 39.6%. Net import volume in Feb was 3,000 tons. Average export price in Feb was at

$1,868/ton, increasing by $242/ton from Jan, $69/ton higher than the average import price in Feb.Of all import sources in Feb, combined import volume from South Korea, Chinese Taiwan, Iran, Japan and USAaccounted for 71.1% of the total import volume, down by 14% from Jan.

Stock and Operation Status of Chinese FGPET Producers

1. Two direct-spinning POY units in Taicang restarted between 5-8 Mar with total capacity of 380kt/yr.

2. Early in the month one 200kt/yr direct-spinning POY unit restarted in Xiaoshan. The unit was taken offfor TA at end of Feb and mainly produces SD POY and FDY.Plant News

3. On 21 Mar, one 180kt/yr direct-spinning POY unit restarted in Xiaoshan. The unit was shut on 10 Mar.

Jan. Feb. Mar. Apr. est.

Run Rate 41% 33% 36%

Output (kt) 245 197 215

Stock A little bit low Normal Normal

With chip settlement again below the break-even point and downstream buying from hand to mouth, chip producersmaintained low run rates though there were some units coming back from TA. By end of the month downstreaminventory was at normal level. Given lusterless sales of polyester fiber, during the month run rates of chip-fed spinningmills in Jiangsu and Zhejiang were between 50-60%.

CCFEI Comment

As for feedstock, With Central Bank of China raising interest rates higher and talks about the 5 percentage pointscut of textile export rebate rate, it is getting difficult for prices to remain at current high level. On the other hand,the scheduled TA of more than 5,000kt PTA capacities will continue to lend support to the market.

As for supply, planned PTA turnarounds in Apr and startup of new downstream capacities may cushion the influencefrom PET TAs that have started or will start, while next month with new supplies emerging prices may see adjustment.

As for downstream demand, players are quite sensitive to market changes recently given firm overseas demandand approaching busy season. Therefore, once the market shows sign of strengthening, trading volume is expected toincrease instantly boosted by players buy-up sentiment.

To sum up,unfavorable economic environment combined with sluggish fiber demand continued to curb PET prices. InH1 and mid Apr, PET sentiment is expected to soften but there will be limited space for FGPET to go down, and it ispossible that TAs of PTA units will help to improve the market.


13/44

China Chemical & Fiber Economic InformationNetwork www.ccfei.net March 2011 [PFY]

Polyester FilamentContract Prices from Majors (yuan/ton)

POY150D FDY50D DTY150DTime

Settled Listed Listed Listed

28Feb-4Mar 15,100 15,100 19,100-19,500 16,500

7Mar-11Mar 15,100 15,200 19,200-19,600 16,500

14Mar-18Mar 15,100 15,200 19,200-19,600 16,500

21Mar-25Mar 15,050 15,200 19,200-19,600 16,500

28Mar-1Apr 15,200 19,200-19,600 16,500

Average Spot Price (yuan/ton)Week Time POY150D DTY 150D FDY 68D

Week 1 28Feb-4Mar 14,710 16,300 17,700

Week 2 7Mar-11Mar 14,890 16,300 17,750

Week 3 14Mar-18Mar 14,760 16,300 17,680

Week 4 21Mar-25Mar 14,710 16,300 17,540

Week 5 28Mar-1Apr 14,670 16,270 17,320

Monthly March 14,748 16,294 17,598

10000

12500

15000

17500

20000

22500

30Sep 30Oct 29Nov 29Dec 28Jan 27Feb 29MarY/T

POY150D DTY150D FDY68D

In March, PFY market was dominated by minor corrections. Early March saw sporadic increases; in mid-Mar,sentiment gradually softened, and in late March, prices corrected in weakness.

In early March, PFY market saw sporadic increases. POY sale/production ratios rose moderately on rebounding PTAfutures, so producers raised prices accordingly but most played cautiously. From 4 Mar, central prices hiked by 100-200yuan/ton, followed by a few more raises. On 9 Mar, PTA futures weakened, exerting downward pressure on PFY, withweakness first seen in some POY offers. In early March, offers for POY 150D/48F hiked from 14,700 yuan/ton to14,900 yuan/ton.

In mid March, PFY prices trended downwards. Market started in weakness on 11 Mar. After the magnitude-9earthquake on that afternoon, some PX plants were shut down, which greatly pushed up PX spot values. In the next fewdays, PX soared to around $1,815/ton, but such strengthening failed to reach the polyester sector, where PFY prices

went stable to weak. By the end of mid-March, as PTA futures surged upwards on strong crude values, POY tradingsentiment slightly improved, but high-end FDY prices corrected downwards. In mid-March, POY 150D/48F pricesdeclined to 14,900 yuan/ton from 14,750 yuan/ton.

Late March saw weak corrections in PFY market. The tentative increases in POY prices in mid-March were of no help inimproving market sentiment, so POY central values slipped downwards in the first few days of late March. On 25 Mar, some POYprices picked up tentatively given much pressure on PFY producers due to high-level feedstock settlements, whereas FDY sectorremained in weakness, although FDY liquidity was markedly better than that of POY and DTY. Near the month end, PFY marketsaw more discounts, resulting in lower yarn prices, especially those of FDY. In late March, POY 150D/48F dropped from 14,750yuan/ton to 14,600-14,700 yuan/ton.

PFY stocks in March decreased slightly, with POY at 15-20 days, FDY at 22-25 days, and DTY at 20-25 days.

Operation Status of Downstream Textile SectorJan Feb Mar Apr est.

Operating Rate 20% 20% 65%

Fabric Stock 18 days 10 days 15 days

Well-sold Products Silk-like fabrics produced on shuttle looms and shuttle-less looms

Despite energy-saving and emission-reducing campaigns in March, run rates of weaving & knitting mills grew to 65% asproducers didnt follow power rationing measures. The campaign will continue in April, concerning more places. It is thus expectedthat downstream run rates in April will hover around the current level.

Daily fabric transaction volume in Textile City of China kept expanding, rising from 3 million meters to 5 millionmeters within the month. Products selling well include chiffon, printed or dyed fabric, jacquard fabric, etc. Meanwhile,the processing cycle of printing and dying was lengthened due to power rationing measures.

Monthly International PFY Value TrendWest Europe ($/ton, DEL) USA ($/ton, DEL) Taiwan ($/ton, DEL)

167dt POY 167dt DTY 150D/48-132F POY 150D/48-132F DTY 230D POY 150D DTY2,420-2,559 2,905-3,043 2,998-3,064 4,012-4,079 2,117-2,220 2,288-2,391

PFY market in North America saw continued brisk transactions. In West Europe, PFY sentiment gradually improved,while that in Taiwan remained in a stalemate.

10000

14000

18000

22000

26000

27Sep 27Oct 26Nov 26Dec 25Jan 24Feb 26Mar

POY150D settled POY150D listedDTY150D listed FDY50D listed

Y/T


14/44

China Chemical & Fiber Economic InformationNetwork www.ccfei.net March 2011 [PFY]Statistics on Exports of Chinese PFY (tons, $/ton)

Jan 2011 Feb 2011 Jan-Feb 2011 Jan-Feb 2010Destination

Exp. Vol. Exp. Val. Exp. Vol. Exp. Val. Exp. Vol. Exp. Val. Exp. Vol. Exp. Val.Turkey 12,096 2,043 9,407 2,113 21,503 2,074 7,725 1,781India 1,242 2,486 910 2,260 2,152 2,390 1,701 1,693

S. Korea 7,336 2,415 7,297 2,373 14,633 2,394 11,484 1,856

Pakistan 13,784 2,043 9,707 2,071 23,491 2,055 13,755 1,560Brazil 7,796 2,010 5,565 2,072 13,360 2,036 3,150 1,756

Others 62,501 2,116 41,704 2,222 104,205 2,158 65,983 1,755Total 104,754 2,116 74,589 2,193 179,343 2,148 103,798 1,741

China exported 74.6kt of PFY in February 2011, down 30.2kt or 28.82% on month. The average export price was at$2,193/ton, up $77/ton or 3.64% from January. China imported 10.2kt of PFY in February, down 4.6kt or 31.08% fromJanuary. The average price of imported PFY was at $2,539/ton, down $135/ton or 5.05% on month.

Exports to Pakistan totaled 9.7kt in February, down 29.71% from January, ranking the first and accounting for13.00% of the total in February. Exports to Turkey totaled 9.4kt in the month, ranking the second, down 22.31% onmonth, and accounting for 12.60% of the total. South Korea, Brazil, Syria, Vietnam, Italy, etc. followed.

Stock and Operation Status of Chinese PFY Producers1. A 100kt/yr polyester unit in Changshu started up on 28 Feb and mainly produces chips in the initialstage after the startup. Spinning lines were scheduled to be added after April.

2. A 250 kt/yr direct-melt-spinning unit in Tongxiang shut down for T/A from 16 Feb to 10 Mar. The unitmainly produces semi-dull POY.

3. A 200 kt/yr direct-melt-spinning unit in Xiaoshan was shut down for maintenance between late Feband early-to-mid March. The unit mainly makes semi-dull POY and FDY.

4. A 200 kt/yr unit in Taicang was shut from 18 Feb to 15 Mar for T/A, while another 180 kt/yr unit wasshut down between 21 Feb and 8 Mar for maintenance. Both units mainly produce semi-dull POY.

5. A 180 kt/yr direct-melt-spinning unit in Xiaoshan was shut down for maintenance during 10-22 Mar.The unit mainly produces semi-dull POY.

6. A 180 kt/yr direct-melt-spinning unit in Xiaoshan shut down on 17 Mar for technological innovation,

which was expected to last about one month. The unit mainly produces semi-dull POY.

Plant News

7. Two direct-melt-spinning units with a combined capacity of 400 kt/yr in Xiaoshan were shut down on18 Mar for a 20-day T/A. The units mainly produce semi-dull POY and FDY.

Jan Feb Mar Mar est.

Run rate 78% 75% 74% Output (kt) 1,350 1,290 1,270 Stock Level Medium to low Relatively high Relatively high

In March, operating rates of PFY plants fell further to 74%, as some plants were shut down for maintenance andsome producers cut run rates. By now, no maintenance plans in April have been heard, but producers may still reduceproduction to keep prices stable if PFY sentiment stays sluggish. Run rates are expected to roll over in April.

In March, overall sale/production ratios for PFY were at the same level as February. In April, more places will take

energy-saving and emission-reducing measures, which will suppress downstream demand to some extent. Nevertheless,new orders are expected to arrive along with the Guangdong Trade Fair, so rigid demand for PFY is likely to increase.

CCFEI Comment

Feedstock: Crude oil prices are likely to fluctuate at a high level and PTA market will get support from strong PXon coming PX T/A season. Meanwhile, some PTA units are set to be offline in Mar-Apr, which will continue to tightenthe market and pull up PTA prices. As for MEG, March nominations were high at around $1,350-1,400/ton. In general,feedstock market has potential to rise.

Supply: PFY producers see inventories at high levels, which means ample supply of most products except for a fewitems.

Demand: In early April, downstream demand will remain low amid weak PFY sentiment, but is likely to strengthen inmid-to-late April when converters have almost run out of feedstock.

To sum up, PFY market will not improve in the short run, given relatively high prices at present. It makes somesense for sellers to lower offers, thus paving way for future increase. When Guangdong Trade Fair opens, new orderswill increase, probably making it the right time to offload products.


15/44

China Chemical & Fiber Economic Information Network www.ccfei.net March 2011 [PSF]

Polyester StapleContract Settlements and Nominations

(yuan/ton)

MonthSinopec

(Delivered)

Private producers

(Ex-works)Jan settled 13700 13550

Feb settled 15100 14900

Mar settled 15000 14850

Apr listed 15100 -

9000

11000

13000

15000

17000


Sinopec(delivered)

Private producers(ex-works)

Y/T

Sinopec nominated its Apr contract price for 1.4D PSF at 15,100 yuan/ton (delivered). On 24 Mar, Sinopecannounced its settlement price for Mar at 15,000 yuan/ton.

PSF and Cotton Prices in China (yuan/ton)

Week Time PSF 1.4D Cotton 328

Week 1 1Mar-4Mar 14860 30603

Week 2 7Mar-11Mar 14880 31161

Week 3 14Mar-18Mar 14750 30822

Week 4 21Mar-25Mar 14610 30558

Week 5 28Mar-31Mar 14380 30362


9000

13000

17000

2100025000

29000

33000

8Oct 6Nov 5Dec 3Jan 1Feb 2Mar 31Mar

PSF Cotton

Y/T

PSF market showed an easing trend in March, with an accumulative decrease of 500-600 yuan/ton, amid strong

wait-and-see tone.

Early March: Since some major producers sold materials at low prices in early Mar, central PSF prices drifteddown visibly. Meanwhile, cotton and PTA rallied, and the market saw expanded trade volume transiently. After a roundof replenishment, with trading atmosphere softening, prices started to edge down. Mainstream talks for spot 1.4D PSFin Jiangsu and Zhejiang decreased to 14,800-14,900 yuan/ton.

Mid March: Declining cotton prices had a certain impact on players confidence, so central trading prices of PSFtrended down steadily. Afterwards, the earthquake in Japan caused PX prices to surge up, but prices for polyesterproducts went stable amid long-short stalemate though activities remained stagnant. In Jiangsu and Zhejiang,mainstream talks for 1.4D PSF were at 14,650-14,750 yuan/ton (ex-works), with an accumulative decrease of 150-200yuan/ton.

Late March: PSF market moved downward further. Wait-and-see stance was stronger, as downstream users buyinginterest was low. Traders offloaded stocks at lower prices one after another, so central prices moved down, and evenhigh settlements for feedstock failed to improve liquidity. Mainstream talks for 1.4D PSF inched down to 14,400-14,500yuan/ton (ex-works), with an accumulative decrease of about 250 yuan/ton.

Monthly International PSF Value Trend

Chinese Taiwan (DEL, $/ton) EuropeDEL, $/ton USADEL,$/ton


2176 2305 2473 2628 2535 2574

North America: Though PSF prices were at all-time high levels, demand didnt shrink but strengthen month bymonth. Garment, non-woven and filling material sectors ran sound, pushing up sales and production of local PSFproducers.

West Europe: Liquidity of local PSF producers was smooth by virtue of good demand. PSF demand from wiper-oriented nonwoven sector was higher than expected, and demand from construction & geotextiles industry alsoimproved, while demand from automobile sector was steady.


16/44

China Chemical & Fiber Economic Information Network www.ccfei.net March 2011 [PSF]

Statistics on Exports of Chinese PSF (kt, $/ton)

Jan 2011 Feb 2011 Jan-Feb 2011 Jan-Feb 2010Destination

Exp. Vol. Exp. Val. Exp. Vol. Exp. Val. Exp. Vol. Exp. Val. Exp. Vol. Exp. Val.

Pakistan 17.2 1626 7.8 1733 25 1659 11.5 1165

US 12.6 1272 5.9 1331 18.5 1291 19.1 1012

Syrian Arab 6.3 1653 4.1 1771 10.5 1700 0.8 1211

Vietnam 4.3 1672 3.8 1732 8.1 1701 2.9 1198

Indonesia 7.6 1613 3.4 1718 10.5 1646 1.2 1110

Others 43.2 1547 21 1609 64.7 1568 33.3 1206

Total/Ave. Val. 91.1 1543 46.1 1627 137.2 1571 68.9 1143

According to the statistics from China Customs, Chinas import volume for PSF in February 2011 is 6.5kt, down5.3kt from the previous month, and the average import price is at $1,862/ton, up $27/ton from January. Chinaexported 46.1kt of PSF in February 2011, down 45kt from previous month, with the average export price at$1,627/ton, up $84/ton on month.

South Korea, Chinese Taiwan and Malaysia rank the top three regions that exported PSF into China Mainland inFebruary, and the top three export destinations of Chinese PSF are Pakistan, the United States and Syria.

Stock Level and Operation Status of Chinese PSF Producers1. One 150kt/yr polyester unit (producing cotton-type PSF, 3-D-crimped hollow PSF and low-melt-pointPSF) in Sichuan, which was shut down in Jan, was restarted on 1 Mar.

2. One PSF line of Luoyang Shihua Chemical Fiber, which was shut down in early 2011, was restarted on5 Mar, with daily production of around 150 tons.

3. One 100kt/yr melt-direct-spinning PSF unit in Jiangyin, which was shut down in early Feb, wasrestarted on about 15 Mar, with daily production of around 300 tons.4. One Jiangsu producer said they delayed the startup of the newly added melt-direct-spinning PSF

after-processing line to mid Apr, which will have a daily production of around 200 tons.5. Yizheng Chemical Fiber restarted four melt-direct-spinning PSF lines, which were shut down in lateFeb, involving daily production of 230 tons.

Plant News

6. One producer in Suzhou closed three melt-direct-spinning PSF lines due to equipment issues, withrestarting date pending

Month Jan Feb Mar Apr est.

Operating rate 87.9% 86.5% 90.1%

Output (kt) 401.6 395.1 411.1

Stock Level Low Medium Medium

After a round of procurement in early Mar, PSF market fell into a stalemate. With units restarted in succession,

run rates in PSF industry picked up. However, due to low sale/production ratio, inventory at the whole PSF industry waspiling up, with average level at about 3 weeks by the end of Mar. (Note: New formula for calculating operating rate hasbeen used since Jan 2011.)

CCFEI Comment

Feedstock: Global crude oil prices firmly stayed at above $100/bbl, and a spate of PTA units would be shut down inApr, so tight supply could not be solved in the short term. Thus, it is unlikely for PTA prices to slump in future.

Demand: Unsmooth sales for yarn led to high yarn inventory. Coupled with high capital pressure, many sellers

slashed prices to offload materials. Despite of low feedstock inventory, spun yarn producers purchased feedstock by

small parcels for PSF prices had been dropping.

Supply: With run rates up, producers had some inventory and faced sales pressure due to the length in PSF

market.To sum up, bearish sentiment of downstream sectors dragged PSF prices down. It is the slow liquidity that is the

biggest obstacle for PSF market to turn better. Since downstream users have basically used up the feedstockpurchased previously, if PSF prices bottom out, a round of purchasing peak may occur.


17/44

China Chemical & Fiber Economic Information Network www.ccfei.net March 2011 [Re-PSF]

Re-PSFHollow Re-PSF Value Trend (yuan/ton)

Variety (6-15D siliconized) Trend Value3-D-crimped in Jiangsu & Zhejiang 2 12022

3-D-crimped in Guangdong (pre-duty) 233 10600

2-D-crimped whitened in Cixi 10 11017

3-D-Crimped Hollow in JZ

9000

11500

14000

16500

14Oct 25Nov 6Jan 17Feb 31MarY/T

March saw soft re-PSF sentiment. Especially after the earthquake in Japan, prices significantly declined. In earlyMar, mainstream ex-works offers for siliconized 3-D-crimped hollow re-PSF in Jiangsu and Zhejiang ranged bound at12,000-12,500 yuan/ton (duty included). After the earthquake, pessimism dominated the market. At first, virgin PSFstarted to decline. In order to relieve pressure from inventory, some re-PSF producers began to slash prices tooffload materials. With more discounts emerging, a few major producers dumped stocks at lower prices, disturbing theorder of price decreasing. Mainstream ex-works offers for siliconized 3-D-crimped hollow re-PSF in Jiangsu andZhejiang decreased to 11,500-11,800 yuan/ton (duty included) at the end of Mar, and low-price materials were hereand there. In export market, prices for 3-D-crimped hollow re-PSF in Jiangsu and Zhejiang did not slide down visibly,with mainstream ex-works offers for siliconized ones firming at $1,600-1,650/ton FOB. But in Guangdong and Fujian,

hollow re-PSF market softened notably, with mainstream ex-works offers for siliconized ones down to 10,000-11,400yuan/ton from 11,200-11,600 yuan/ton (duty excluded) of last month.

2-D-crimped hollow re-PSF market in Cixi followed the trend in 3-D-crimped hollow re-PSF market. Mainstream offers forwhite siliconized items dropped to 10,700-10,900 yuan/ton (duty included) from last month's 11,300-11,500 yuan/ton (dutyincluded). With sale/production ratios at 50-70%, many producers had increasing pressure from inventory.

Cotton-type Re-PSF Value Trend (yuan/ton)Variety (in Jiangsu and Zhejiang) Trend Value

High-tenacity low-elongation virgin-like 1.5D 397 12670

High-pressure spun virgin-like 1.5D 473 11913

High quality raw white 1.5D 77 11196

High quality raw white 1.5D (SW China) 108 11525

Low quality raw white 1.5D 216 10550

Re-POY150D/96F 94 13000

High-tenacity Virgin-like in JZ

8600

10280

11960

13640

15320

17000

14Oct 25Nov 6Jan 17Feb 31Mar

Dragged by dropping virgin PSF and some low-price re-PSF, cotton-type re-PSF prices showed a sustaineddowntrend. Mainstream ex-works offers for high-tenacity low-elongation virgin-like re-PSF dropped to 12,100-12,300yuan/ton (duty included, hereafter the same) from Februarys 13,200-13,500 yuan/ton. Offers for high-pressure spunvirgin-like re-PSF moved down to 11,000-11,500 yuan/ton from 12,500-12,800 yuan/ton of the previous month; those for1.5D raw white high-quality re-PSF declined from 11,600-11,800 yuan/ton of February to 10,800-11,000 yuan/ton; andthose for 1.5D raw white high-quality re-PSF in Southwest China drifted down from 12,000-12,200 yuan/ton ofFebruary to 11,000-11,200 yuan/ton (tax included).

Re-PFY market saw a range-bound in Mar. Mainstream ex-works offers for re-POY 150D edged down to 12,500-13,000 yuan/ton from 12,500-13,500 yuan/ton of the previous month.

Flakes Price TrendWhite, for 3-D-crimped White, for virgin-like White, for re-PFY Green, for spinningAverage in Mar 8887 8538 9725 8078

Forecast for Apr

Flake prices trended down in most of Mar, and warmed up in late Mar. Stepping into Mar, flake supply improvedwith weather becoming warm. Coupled with sliding re-PSF prices, re-PSF producers weighed down flake prices.However, from late Mar, since some major producers raised low end offers, and raised bids for feedstock, flake pricesrebounded slightly.

Offers for white flakes ready for spinning 3-D-crimped hollow re-PSF in Jiangsu and Zhejiang decreased from9,000-9,500 yuan/ton (duty excluded, hereinafter the same) of February to 8,500-8,800 yuan/ton. Offers for whiteflakes used to spin high-quality regular re-PSF dropped to 8,300-8,400 yuan/ton from last months 8,700-8,800yuan/ton. Offers for green flakes dwindled to 8,000-8,100 yuan/ton from 8,200-8,400 yuan/ton. In Guangdong and

Fujian, white flakes used to spin 3-D hollow re-PSF were quoted lower at 8,500-8,700yuan/ton from 9,200-9,500yuan/ton. In Southwest China, offers for white flakes ready for spinning decreased to 7,700-7,900 yuan/ton fromFebruarys 8,700-8,800 yuan/ton. Imported white flakes ready for spinning tailed off to $1,150-1,200/ton CFR from$1,300-1,400/ton CFR.

Y/T


18/44

China Chemical & Fiber Economic Information Network www.ccfei.net March 2011 [Re-PSF]

Statistics on Imported PET Scraps and Wastes into China (kt, $/ton)Jan 2011 Feb 2011 Jan-Feb 2011 Jan-Feb 2010

OriginImp. Vol. Ave. Val. Imp. Vol. Ave. Val. Imp. Vol. Ave. Val. Imp. Vol. Ave. Val.

Japan 21.5 805 19.6 860 41.1 831 41.9 618

USA 15 765 8.8 795 23.8 776 24.5 598Germany 8.4 769 4.7 807 13.1 782 16.3 536

Thailand 9.0 1082 6.8 1011 15.8 1052 15 643

Taiwan 3.1 833 1.9 860 5.1 843 16.9 557

Others 69.4 827 49.5 875 119 847 100.9 586

Total 126.5 831 91.3 870 217.8 847 215.7 591

According to China Customs, China's import volume of PET scraps and wastes in February is 91.3 kt, a decrease of35.2 kt from January, while the average import price is at $870/ton, up by $39/ton on month.

The statistics show that import volume reduced somewhat in February, and average import price moved higher.Japan ranks the first in all the countries and regions that exported flakes into China Mainland, followed by the USA,Indonesia, Thailand, Germany, Mexico, Hongkong, South Korea, Spain and Peru. As for import price, the highest

numbers are for materials from Myanmar, followed by those from Sudan, Israel, Nigeria, the Philippines, Venezuela,Indonesia, Thailand, Malaysia and Tanzania. PET scraps and wastes are mainly imported in February by general tradeand trade of processing with imported materials.

Operation Status of Chinese Re-PSF Producers1. One 150kt/yr polyester unit (producing cotton-type PSF, 3-D-crimped hollow PSF and low-

melt-point PSF) in Sichuan, which was shut down in Jan, was restarted on 1 Mar.

2. Cixi Santai restarted its recycled PFY unit in early Mar, involving a capacity of 130 tons/day.

3. Yangzhou Ruiyue closed its unit on 8 Mar, and restarted it in mid Mar, involving a capacity of400 tons/day.

Plant Operation

4. Some producers in Cixi had been influenced by power rationing in Mar, and some producers inJiangyin also had received notice of power rationing.

Domesticproducer Jan Feb Mar Apr est.

Operating rate 60% 35% 65%

Re-PSF prices were weak in Mar. Sale/production ratios slid down, so inventory pressure on producers increased.Cotton-type re-PSF producers saw inventory at less than 5 days and ran at around 50-70% capacities. Hollow re-PSFproducers saw inventory at about 20-30 days and operating rates at around 70-80%, while re-PFY producers heldinventory of about 10 days, with run rates at 70-90%.

CCFEI Comment

In March, re-PSF market softened continuously, and liquidity was stagnant in general given increasingly emerginglow prices.

From the view of cost, due to the slump of re-PSF prices in March, bottle flake prices met certain pressures.Though prices for imported bottle flakes were firm before mid March, the numbers dropped later given more suppliesof homemade materials in Mar. And though the prices rebounded by the month end, it will be not sustainable with thewarming weather. Coupled with lower prices for imported materials and power rationing in Jiangsu and Zhejiang, themarket performance is not optimistic on the whole in the future.

As for supply/demand fundamental, inventory pressure on re-PSF producers increased amid lower re-PSF pricesand weak downstream sentiment. Though the talk of lower export rebates of textile products will benefit re-PSFprices in the short run, downstream textile market will meet more obstacles in the long term, which thus casts a cloudover the market outlook.

Generally speaking, as virgin PET market was sound amid higher Mar settlements at end Mar, which bolsteredcotton-type re-PSF market to stabilize, and also because of the coming busy-season for spun yarns in April, as well as

the power rationing, market mentality improved slightly. Moreover, in April, as many as 5,200 kt/yr PTA capacities willbe turned around, which will support virgin PET market a lot. As a result, re-PSF market will no be so bad despite not sogood in the future. Re-PSF producers should pay attention to related markets and macro economic situations, andmeantime control inventory cautiosly.


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China Chemical & Fiber Economic Information Network www.ccfei.net March 2011 [CPL]

CaprolactamContract Price (yuan/ton, $/ton)

Month Change Range Prev. Month

Mar Settled 1100 29100-29200 28000-28100RMB-

based Apr Listed 400 29200 28800

Mar Settled 305 3500-3520 3200-3210USD-based Apr Listed 90 3630-3650 3550

17000

21000

25000

29000

May Jul Sep Nov Jan Mar

1500

2000

2500

3000

3500

4000

RMB USD

Asian caprolactam contract price for March was settled at $3,500-3,520/ton (CFR China, L/C 90 days), rising by$305/ton from February. Nominations for April were raised, with the numbers for high-end CPL at $3,630-3,650/ton.

Sinopec announced settlement price for March contracts at 29,100-29,200 yuan/ton (D/A, solid, AA grade), anincrease of 1,100 yuan/ton from February settlement. DSM Nanjing issued settlement price for March at 29,200yuan/ton, and list price for April from Sinopec was pegged at 29,200 yuan/ton.

Average Spot Price (yuan/ton, $/ton)

Week Time RMB-based

USD-

basedWeek 1 28Feb-4Mar 28640 3554

Week 2 7Mar-11Mar 28680 3558

Week 3 14Mar-18Mar 28480 3546

Week 4 21Mar-25Mar 28720 3578

Week 5 28Mar-1Apr 28900 3592


2500

2700

2900

3100

3300

35003700

3900

28Nov 18Dec 7Jan 27Jan 16Feb 8Mar 28Mar

USD

RMB-based spot market: CPL spot prices made corrections in March.Week 1: Market prices for spots edged up, with mainstream numbers at 28,800-29,000 yuan/ton. Early in the

week, inquiring was active, and the market stabilized later.Week 2: Market prices for spots moved lower, with mainstream numbers at 28,600-28,800 yuan/ton. Liquidity

was weak due to few inquiring activities.Week 3: CPL spot prices inched down. With few inquiring activities, liquidity was modest. Mainstream trading

prices were seen at 28,400-28,600 yuan/ton.Week 4: CPL spot prices edged up, with mainstream offers at 28,800-29,000 yuan/ton and trading prices at

28,600-28,800 yuan/ton.Week 5: Spot prices weakened, with mainstream offers at 29,000 yuan/ton and a little above the level and

trading prices at 28,700-28,800 yuan/ton. Liquidity was modest.USD-based spot market: CPL prices went firm on the back of tight supply caused by turnarounds of units.Week 1: Offers were few and converters made moderate replenishments. Early in the week, bonded goods were

traded at $2,580/ton. After that, buying interest slowed down, so liquidity was modest.Week 2: Offers were pegged at above $3,580/ton. By the weekend, selling ideas were pegged at $3,560/ton. In

midweek, bonded goods were traded at $3,580/ton. By the weekend, buying interest slowed down, so trading was

muted.Week 3: Selling ideas were at $3,560/ton, with a few deals done at $3,530-3,540/ton. In midweek, sellers hiked

offers to $3,580/ton.Week 4: Offers were hiked to $3,600-3,620/ton. Buyers were cautious in buy-rise and mainstream prices were

pegged at $3,580-3,600/ton.Week 5: Offerswere pegged at $3,600-3,630/ton and mainstream prices were at around $3,600/ton. By the

weekend, prices moved down slightly.

Monthly International CPL Value TrendAsia ($/ton, CFR) Europe (/ton, DEL)

Feb Mar Apr est. Feb Mar Apr est.

3200-3210 3500-3520

2185-2245 2285-2395

In Asia, March contract prices for caprolactam moved higher, settled at $3,500-3,520/ton CFR Korea/Taiwan,and $3,500-3,520/ton CFR China MP. As for April contracts, nominations rose to $3,630-3,650/ton. In Europe,contract prices for March were at Eur2,285-2,395/ton given higher benezen prices and tight supply. In addition, it isexpected that April contract prices in Europe is likely to be stable in line with tight supply and stable demand.

$/TY/T

$/T


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China Chemical & Fiber Economic Information Network www.ccfei.net March 2011 [CPL]Statistics on Caprolactam Imports in China (ton, $/ton)


Imp. Vol. Ave. Val. Imp. Vol. Ave. Val. Imp. Vol. Ave. Val. Imp. Vol. Ave. Val.

Belarus 6736 2870 3115 2927 9851 2888 7276 2221

Poland 2000 2772 3000 2960 5000 2885 10700 2194

Russia 12100 2834 7300 2932 19400 2871 27388 2215US 6314 2747 5984 2840 12298 2792 12158 2115

Mexico 5687 2811 3149 2998 8836 2877 8272 2197

Japan 10910 2823 8135 2962 19045 2883 13130 2296

Others 10141 2812 10035 2925 20176 2869 33076 2272

Total 53887 2817 40719 2930 94606 2866 111999 2205

In Feburary 2011, China imported 40.7kt of caprolactam, increasing by 24.5% from January. During Jan-Feb, Chinatotally imported 94.6kt, decreasing by 15.5% from the same period of last year. The largest import volume in Februarywas from Japan, amounting to 8,135 tons. Volume from Russia was the second large, at 7,300 tons, followed by thatfrom U.S. at 5,984 tons.

Average import price in February is at $2,930/ton, up 4.01% from January. The highest number for February is$3,103/ton for ex-S.Korea cargoes, followed by $2,998/ton for ex-Mexico materials. The number from U.S. was at$2,840/ton, the lowest.

Inventory Volume and Operation of Caprolactam Producers1. Japans Sumitomo closed its 85kt/yr CPL line at Niihama, Ehime prefecture in late March due

to feedstock benzene in short supply and the company planned to restart it in April. However, the95kt/yr line in the same region will keep running.

Plant Operation 2. Taiwan's CPDC finished a turnaround on its caprolactam plant at Hsiaokang in mid-to-lateMarch, with capacity expanding from 180kt/yr to 200kt/yr. The companys 100kt/yr CPL unit atToufen was closed due to power outage and had not been restarted. The company planned to take a

three-week turnaround on the unit from the last week of April.Domestic producer Jan Feb Mar est.

Operating rate 91.3% 90.5% 94.0%

Production (kt) 42.5 44.5 46.2

China imported 40.7 kt of caprolactam in Feburary, and together with domestic production of around 44.5 kt,Chinas apparent consumption in February is 85.2 kt, down 10.8% from January.

In March, run rates of CPL units at home and abroad increased a little, and producers inventories were still low.Operating rates of downstream nylon chip units were stable at around 70%. Conventional-spinning chip unit ran at lowrate, so overall demand was modest. Operating rates of nylon textile yarn producers were sound at around 80%; cordfabric plants were running at around 60% capacity. Generally speaking, downstream demand was modest.

CCFEI Comment

Supply: Overall, supply tightness will ease in April. Taiwans CPDC resumed normal production on its CPL unit atHsiaokang and Japans Sumitomo will restart 85kt/yr CPL unit in April, though Ube Industries will take a plannedturnaround during March-April. So, tightness will ease slightly on the whole.

Demand: In March, converters operating rates were stable on month. Presently, high-speed spinning chipproducers were running at 75-80% capacity, while conventional-spinning chip makers were operating at 60-70%, withunsound rates at fishnet-yarn and staple-fiber producers. Downstream nylon textile filament plants were operating ataround 80% capacity, with the rates of cord fabric plants at 65-70%. Overall run rates decreased from last month.Looking forward, demand will not be optimistic.

Cost: Crude oil and benzene values remained strong in March. NYMEX crude values broke through $100/bbl markduring March, and hovered at above $100/bbl; Asian benzene values dropped to $1,150/ton FOB Korea mark; and

European benzene fell to $1,240/ton. Looking forward, crude and benzene prices are likely to range bound strongly.To sum up, feedstock values are firm, tight supply for CPL eases, and downstream demand is not strong. Looking

forward, CPL market will make a range-bound in the short run. In the medium term, the market is very likely to makecorrections.


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China Chemical & Fiber Economic Information Network www.ccfei.net March 2011 [PA CHIP]

19

Nylon ChipAverage Price (yuan/ton, $/ton)

Month Up/down Range Prev. Month

Conventional March 30000 30000March 100 32100 32000

High-speedUSD 20 3920 3900

23000

2500027000

29000

31000

33000

Sep Oct Nov Dec Jan Feb Mar

Conventional H-speed

In Mar, with tight availability, CPL market prices surged to $3,600/ton. Thus nylon chip producers tended to raisethe prices further given rising cost pressure. However, weakening downstream demand frustrated the uptrend of themarket in Mar. Given such impact, most nylon chip producers encountered stagnation with expectation of larger negativeterritory.

As for the market, offers for Taiwan-origin high-speed spinning nylon chips were at $3,980-4,050/ton by end Mar.Tight feedstock availability drove nylon chip producers to hold on to high offers, but downstream buyers only bidcautiously, with low end indications at $3,800/ton. As for homemade nylon chips, with much higher CPL prices, chip

producers mostly raised their offers, but the space was limited given softening demand, hereinto, negotiations for high-speed spinning SD nylon chips were at 31,300-33,000 yuan/ton (D/A 90 days, delivered) by end Mar, with those inZhejiang at the high end and in Jiangsu and Shandong at the low end. Demand from nylon textile yarn sector retreated,suppressing the uptrend. Major nylon chip producers were running at 70-80% of full capacity, with low inventories. Andin conventional spinning nylon chip market, cash-based prices were generally at 29,500-30,500 yuan/ton by end Mar, andproducers kept offers high due to larger loss coverage, while demand from fish-net yarn and staple fiber producers waslackluster with run rates at majors only at 60%, suppressing the uptrend.

Weekly Spot Average Price (yuan/ton)Week Time Price




Week 4 21Mar-30Mar 31300Monthly Ave. in Mar 31275

23000

25000

27000

29000

31000

5Oct 3Nov 2Dec 31Dec 29Jan 27Feb 28Mar

CPL market prices rose from $3,550/ton to $3,600/ton, with a markup of $50/ton during the month, whichimposed more pressure on downstream nylon chip market. Nylon chip producers operated cautiously and raised theirprices to relieve heavy cost pressure, but the pull-up moves met huge obstacles on weakening market demand.

As for conventional spinning nylon chips, prices for homemade bright chips gradually stabilized from previousuptrend, and cash-based prices were steady at 29,500-30,500 yuan/ton, with high-end numbers for Jiangsu-origingoods at 30,000-30,500 yuan/ton and low-end numbers from small-sized producers and traders at 29,500-29,800yuan/ton. Most nylon chip producers and traders still aimed to raise offers given higher costs, but the markup waslimited amid cautious downstream buyers. As for high-speed spinning SD chips for textile yarn production, prices forhomemade SD chips hiked slightly to 31,300-33,000 yuan/ton (D/A 90 days, delivered), hereinto, cash-based prices forJiangsu-origin goods moved up by less than 200 yuan/ton to 30,500-30,800 yuan/ton, while those for Zhejiang- andSouth-China-origin high-quality goods were generally flat at 33,000 yuan/ton (D/A 90 days, delivered), mainly due toweak nylon textile yarn sector. As for the run rates, major nylon chip producers operated at around 70-80% capacity,while producers who produce bright chips or chips for cord fabric production performed poorly, with some majors onlyat 60% capacity.

Monthly International Nylon Chip Value Trend

Taiwan ($/ton)

Jan Feb Mar Apr 2011 est.

3530 3980 4000

In Mar, higher CPL prices supported Taiwan-based nylon chip producers and traders to quote higher at $3,950-4,050/ton. And it is expected that nylon chip prices will stay high, as CPL prices are unlikely to drop in a certain period.Nevertheless, demand from downstream nylon textile yarn sector started to retreat, so negative impact will turn up onnylon chip market if nylon fiber prices fail to follow up.

Y/T

Weekly Spot Average Price

Y/T


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China Chemical & Fiber Economic Information Network www.ccfei.net March 2011 [PA CHIP]

20

Statistics on Nylon Chip Imports into China (kt, $/ton)Jan 2011 Feb 2011 Jan-Feb 2011 Jan-Feb 2010


Taiwan 24.33 3059 15.36 3159 39.7 3097 47.99 2470

Russia 3.65 2837 4.3 3037 7.95 2923 4.47 2226

Belgium 2.28 2789 1.78 2906 4.06 2840 5.06 2302

Germany 2.12 2658 2.54 2862 4.72 2770 5.47 2710

S. Korea 5.45 3108 4.05 3212 9.51 3152 7.66 2563

USA 3.3 2899 2.8 3131 6.1 3005 7.98 2294

Total 46.84 3027 36.59 3130 83.53 3072 47.57 2309

In February, China mainland imported 36,596 tons of nylon 6 chips, down by 10,243 tons or 21.9% on month. Averageprice for imported nylon 6 chips in February was at $3,130/ton, up by $103/ton on month. Among them, materials fromTaiwan totaled 15,357 tons, down by 8,976 tons or 36.9% on month, accounting for 41.9% of the total import volume, aslightly lower percent compared with that of last month. The average price for Taiwan-origin cargoes was at $3,159/ton,$100/ton higher from Januarys $3,059/ton. South Korea, Germany, the USA and Japan are also major exporters to Chinamainland. Import volume from Russia and Germany increased, while that from the USA, Belgium and South Korea

decreased.

Operation of Nylon Chip Producers in China

Plant News

In Mar, run rates at major nylon chip and nylon cord fabric producers were generally at 60-80%.With higher operating pressure on rising feedstock costs, producers generally ran cautiously.

The startup of Zhejiang Mesbon Chemicals 70kt/yr new semi-dull nylon chip unit was delayed toafter mid April.

Wuxi Mingte Chemical Fibers 50kt/yr nylon chip unit was initially planned to be restarted by theend of Mar, but currently, it is still in outage.

Sinopec Shijiazhuang Refining and Chemical's 25 kt/yr polymerization unit was planned for a 15-day turnaround in early April.

Shandong Shifengs 15 kt/yr industrial grade nylon chip unit will remain in outage till May.

Dec Jan Feb Mar

Output (kt) 99 99 90

According to the statistics of CCFEI, China's nylon chip production in Feb is 90kt. Import volume decreases by 10.2kt,while export volume decreases by 0.2kt. Apparent consumption decreases by around 17kt. Chinas nylon chip production inMarch is estimated to increase slightly, mainly due to moderate inventory.

CCFEI CommentAs for costs, CPL prices are unlikely to drop in 2011 given its tight availability, which will support nylon chip market

to keep stable with upward momentum. As for the future, though high CPL prices lacked supports from downstreamdemand in Mar, they are also unlikely to drop sharply in the future backed by rigid demand on low inventory atdownstream nylon chip producers. However, with high cost pressure, major nylon chip producers have to operatecautiously in April and raise the prices actively.

As for supply, though CPL prices hiked, chip prices only increased slightly given weak downstream demand, so nylonchip producers only operated at low rates given meager profit margins, with more shutdown plans and the delayedstartups of new units. As for the future, demand from nylon textile yarn sector would not be favorable given powerrationing, which would surely result in low operating initiatives of nylon chip producers. So, it is expected that majorchip producers will mostly run at 60-80% capacity or turn around the units to avoid losses.

As for demand, both liquidity and prices of nylon fiber failed to increase further on a weaker nylon textile yarnsector. Nylon textile yarn producers only operated moderately given rising inventory and meager profit margins, and ifmarket demand cannot improve much and the prices fail to hike notably in April, their demand for nylon chip will behampered further. On the other hand, cord fabric, staple fiber and fish-net yarn markets are still subdued, anddemand from them will be limited given their low run rates on the slow follow-ups of the prices for their products.

To summarize, high CPL prices continued to press nylon chip producers much, so chip producers will have to raisechip prices in the future, especially for bright one on their larger loss coverage. High feedstock costs and unfavorablemarket outlook will also discourage the operating initiatives of nylon chip producers, which on the other hand will helpto push up chip prices. In a nutshell, nylon chip prices are likely to increase given rising CPL prices, but the upsidepotential will not be large in the future given the overall lackluster demand.


23/44

China Chemical & Fiber Economic Information Network www.ccfei.net March 2011 [NFY]

Nylon FilamentAverage Price (yuan/ton)

Month Change Price Prev. Month

FDY70D/24F March 400 36700 36300

DTY70D/24F March 500 38000 3750026000

28500

31000

33500

36000

38500

Oc t Nov Dec Jan Feb Mar

FDY7 0D/24F

DTY70D/24F

As for costs, the higher prices for CPL and nylon chips imposed more cost pressure on nylon fiber producers, andthus prices for main specs of nylon textile yarn continued to increase, but the markup decreased a lot compared withlast month, mainly due to weaker demand from textile sector. Non-textile yarn prices, however, performed better,mainly due to the too low values previously. As for inventory, most nylon fiber producers operated on a hand-to-mouthbasis, so the inventory was low, with 15-day inventory on average. As for the future, nylon chip market will still show astable-to-firm trend, so cost pressure on nylon fiber producers will not ease, and thus nylon fiber prices may be pushedup.

As for the market fundamental, downstream converters only showed lusterless purchasing appetites given much

higher feedstock costs, as well as power brownout measures.

Weekly Spot PriceWeek Time FDY70/DTY70

Week 1 1Mar-6Mar 36700/37600

Week 2 7Mar-13Mar 36700/38000

Week 3 14Mar-20Mar 36700/38000

Week 4 21Mar-30Mar 36700/38000

Monthly Ave. in Mar 36700/37900

27000

30000

33000

36000

39000

7Oct 5Nov 4Dec 2Jan 31Jan 1Mar 30Mar

FDY70D DTY70D

FDY: Liquidity slowed down due to weaker demand from downstream weaving and warp-knitting mills, and withample order-intakes and low inventory, the prices moved up early this month but later, they rolled over or even droppedslightly, suppressed by lackluster demand. On the other hand, producers still ran at as high as 80-90% capacities. InShengze and Jiaxing markets, SD FDY 70D/24F was traded at 36,500-37,000 yuan/ton (D/A, 90-180 days) by themonth end, up by 500 yuan/ton given high feedstock costs. FD specs also performed well, with mainstream FD FDY70D/24F traded at 37,500 yuan/ton. As for fine-denier specs, SD FDY 40D/12F was traded at 39,000-40,000yuan/ton, while FD FDY 40D/34F was offered at 40,000-41,000 yuan/ton. Prices mostly stabilized.

DTY: In Mar, despite weaker demand from knitgoods sector, producers still raised the prices on rising feedstockprices, though the markup decreased notably. This month, prices for high-end DTY70D/24F were at 39,000-39,500 yuan/ton (D/A, 90-180 days), and those for medium-end products moved up by 500 yuan/ton to 37,500-39,000yuan/ton (cash for the low end and D/A 180 days for the high end). Low-quality DTY 70D/24F was priced higher by 500at above 35,500 yuan/ton. Fine-denier 30D/10F was generally priced at 42,500-44,500 yuan/ton. Downstream, overallrun rate of nylon-fed circular knitting and covering machines were at 50-60%, but buying interest retreated slightly.

In cord fabric sector, mainstream prices rose to 36,500-37,000 yuan/ton. Prices surged by 1,000 yuan/ton onhigher feedstock values, but liquidity was still slow. Run rates of large-sized cord fabric producers were only at 60-70%with moderate inventory. Mainstream prices for monofilament 30D moved up by 1,000 yuan/ton to 36,500-37,000yuan/ton, due to stable demand from textile sector and passable profit margins. For nylon staple fiber, mainstreamprices for 1.5D climbed up by 500 yuan/ton to 32,000-32,500 yuan/ton due to low inventory, despite lusterless demand.

International Monthly Prices for Nylon Filament

Taiwan FDY70D/24F ($/ton)

Jan 2011 Feb 2011 Mar 2011

4190-4230 4440-4470 4750-4820

Taiwan Market: Downstream demand was sound; Due to higher feedstock costs, the prices surged further, with runrates at above 90%.

European Market: In Mar, liquidity in knitgoods and seamless garment markets was slow, and demand from weavingmills and warp-knitting mills were mostly subdued. However, demand from weft-knitting mills was stable.

Y/T

Y/T


24/44

China Chemical & Fiber Economic Information Network www.ccfei.net March 2011 [NFY]

China Nylon Filament Import Statistics (Unit: ton, $/ton)Jan 2011 Feb 2011 Jan-Feb 2011 Jan-Feb 2010


Taiwan 6515 3397 4617 3516 11132 3446 12321 2728

S. Korea 1459 3798 883 4075 2342 3902 1905 3414

Malaysia 583 3730 278 3741 860 3738 1127 2616

Thailand 217 3882 211 3636 429 3752 183 3172

Total 9967 3607 6891 3752 16858 3666 17412 2953

According to Customs Statistics, China mainland imported 6,891 tons of nylon 6 filament yarns in February, down by3,076 tons on month, with an average price at $3,752/ton, up by $145/ton from January. Of them, 4,617 tons were fromChinese Taiwan, down by 1,898 tons on month and accounting for 67% of total import volume, with average import price at$3,516/ton, up $119/ton from that of January; besides, 883 tons was from South Korea, 278 tons from Malaysia, and 211tons from Thailand.

Nylon Filament Industrial News

Plant News

Zhuji Xinqins POY project with 48 spinning positions was put into production at 50% capacity in Mar,and Zhejiang Deke, who currently produces DTY, would gradually start up its POY capacity with 72 spinningpositions in Apr. Yiwu Huading Nylon plans to add 40kt/yr nylon fiber capacity, which is expected to be

completed by the end of 2011. Fujian Kaibang is to construct a new 30kt/yr nylon project in 2011, makingits overall capacity to 70 kt/yr. Changle Liheng plans to add 60kt/yr nylon filament capacity in 2011.Wujiang Yatai plans to start up a 144-position spinning line in May. Zhejiang Xinfu Holdings plans to expandits nylon filament capacity by 10kt/yr to 20kt/yr in 2011.

Domestic Dec Jan Feb Mar est.

Output (Kt) 125 117 103

According to CCFEIs statistics, Chinas nylon filament production in February is around 103kt, with operating rateat around 65-70% on average. Import volume and export volume decreased by about 3.1kt and 2.9kt respectively inFebruary, so apparent consumption decreased by around 13.8kt month-on-month. Production in March is expected toincrease on the back of the startups of new units, while inventory will be moderate.

CCFEI Comment

In March, prices for nylon textile yarns moved up to relieve the cost pressure in line with rising feedstock prices,and inventory was still moderate despite the mild increase, while those for non-textile products such as cord fabric,staple fiber and fishing-net yarn also hiked to ease cost pressure, and the markup was larger than that of textile yarnsdue to bigger loss coverage. Looking forward, the factors affecting nylon yarn price trend are as follows:

Cost: With tight supply for CPL and nylon chips, feedstock costs for nylon filament yarn continued to move up, despiteweaker demand from downstream textile products and cord fabric sectors. As for the future, as record highs for the month-end feedstock values have imposed more pressure on nylon fiber producers, it is expected that downstream yarn makers willhave to raise the prices for their products further with better demand from their buyers.

Supply: Though demand from downstream sectors weakened, large-sized nylon fiber producers still ran at 80-90%

capacities, citing their low inventories of about 15 days. Coupled with some new capacities, supply increased slightly.However, some producers may not be active in production given current high feedstock costs and their meager profitmargins, and non-textile yarn makers will also operate cautiously given the lusterless liquidity. So, run rates are hard toimprove further.

Demand: With power rationing in some regions, downstream nylon textiles makers showed less interest inpurchasing and mainly digested previous stocks, while industrial items makers also purchased from hand to mouth. Asfor the future, high feedstock costs will impose heavier operating pressure on downstream converters, so the sentimentis unlikely to improve much, but the demand will not be so bad supported by rigid demand and buy-rise intention ofdownstream buyers.

To sum up, nylon fiber producers had to raise their prices in March in line with higher feedstock costs, and the uptrend willcontinue in the future, as feedstock prices are not likely to drop sharply. As for fundamental, run rates at nylon fiber producers

will increase slightly given their low inventories and the startups of new units. However, downstream buyers will react cautiouslygiven so high prices for nylon fibers and their low profit margins, which will prevent demand from improving further. On thewhole, nylon fiber prices will pick up on the back of high feedstock prices, while producers sale/production ratios will continue tobe weak, which will curb the uptrend of nylon fiber market in April.


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China Chemical & Fiber Economic Information Network www.ccfei.net March 2011 [C3]

PropylenePrice Trends of Propylene vs Crude Oil

11001150120012501300135014001450150015501600

26N

ov

3Dec

10Dec

17Dec

24Dec

31Dec

7

Jan

14

Jan

21

Jan

28

Jan

4Feb

11Feb

18Feb

25Feb

4M

ar

11M

ar

18M

ar

25M

ar

1Apr

$/T

6065707580859095100105110

$/bbl

C3(FOB Korea) WTI Crude

Propylene Market Trend in March

Asia:

Week 1: With tight supply and robust demand for FOB cargoes, FOB Korea benchmark surged by $40/ton to

march 2011 china report

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