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In the ever-evolving landscape of global commodities trading, one intriguing opportunity has captured the attention of investors – Purified Terephthalic Acid (PTA), particularly China's PTA market.
What Is Purified Terephthalic Acid?
The growing demand for PTA stands as a testament to its indispensable role in today's consumer-driven world. PTA is a crucial raw material in the production of polyester fibers, films, and resins, which are used to manufacture numerous everyday essential products.
Purified Terephthalic Acid Uses
From the clothes we wear and the bottles that package our beverages to the fabrics adorning our homes, PTA is an essential building block that contributes to the convenience and comfort of modern life.
As emerging economies continue to urbanize and the global middle class expands, the demand for polyester-based products is steadily increasing. This global market trends, combined with innovations in the textile and packaging industries, points to a promising future for PTA. This further solidifies its position as a sought-after commodity in an ever-evolving market landscape.
At the forefront of the purified terephthalic acid market growth is China, which has been on the rise in dominating the PTA market. The growing demand also makes PTA Futures one of the most actively traded contracts in the world. This article aims to delve into the three key factors to take note when investing in China's Purified Terephthalic Acid (PTA) Futures.
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China’s Dominance in the Purified Terephthalic Acid Market
According to Offshore Technology, the global purified terephthalic acid PTA capacity is expected to experience substantial growth over the next five years, potentially increasing from 117.86 million tonnes per annum (mtpa) in 2022 to 171.16 mtpa in 2027, marking a significant 45% growth. This growth will be driven by the addition of approximately 32 planned and announced PTA projects, primarily located in Asia, followed by the Middle East, in the coming years.
Asia is set to contribute the most to this capacity expansion, with an estimated addition of 47.40 mtpa from 22 new-build planned and announced projects. Additionally, the region is expected to add 0.15 mtpa in capacity through the expansion of existing PTA projects from one planned project.
Figure 1. Capacity Additions of Purified Terephthalic Acid production of different countries by 2027 from Offshore Technology.
Among all the countries, China leads the way in capacity additions, with a planned capacity increase of 35.80 mtpa from 16 projects that have been planned and announced. The most substantial capacity boost will come from two planned projects – the Fujian Fuhaichuang Petrochemical Zhangzhou PTA Plant and the Guangxi Tongkun Petrochemical Qinzhou PTA Plant, each boasting a capacity of 3 mtpa. These projects are anticipated to commence PTA production in 2025.
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Global Growing Demand of Purified Terephthalic Acid
According to Globe News Wire, the global demand for Purified Terephthalic Acid (PTA) is expected to witness significant growth, with a projected Compound Annual Growth Rate (CAGR) of 5.5%. This will ultimately reach a market value of US$ 99,496.2 million by the year 2032.
Several factors contribute to the increase in global demand of PTA. A key driver is the increasing utilization of polyester fibers across various industries. Polyester fibers are in high demand due to their compatibility with both natural and synthetic fibers, which is driving the demand for PTA in the coming years.
PTA is a critical component in the production of synthetic fibers, accounting for 70-80% of polyester products. It is preferred for its cost-effectiveness compared to dimethyl terephthalate (DMT). PTA finds extensive applications in industries such as textiles, packaging, and medicine, where it is used to treat conditions like peptic ulcers, reflux esophagitis, and gastroesophageal reflux disease (GERD). Additionally, sectors like maritime, transportation, construction, and wind energy also contribute to the demand for PTA in the near future.
The paints and coatings sectors are another area experiencing increased demand for PTA due to its high efficiency. Furthermore, the use of unsaturated polyester resin (UPR) across various industry verticals, including maritime, wind energy, transportation, construction, and electrical, is driving the growth of the PTA market. UPR is valued for its cost-effectiveness, superior performance, and eco-friendly properties.
UPR boasts rapid strength development, excellent resistance against abrasion, chemicals, corrosion, heat, high impact, and structural strength. These qualities make it a popular choice in the construction sector, where it is used as a concrete and sealant, further contributing to the growth of the PTA market during the forecast period.
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ZCE is the Only Exchange to Offer PTA Futures
Despite PTA being widely used, finding PTA futures can be challenging. As of September 2023, Zhengzhou Commodity Exchange (ZCE) is currently the only exchange offering PTA futures contracts to the global trading community.
The future was initially introduced in December 2006 for domestic traders and later expanded in 2018 to facilitate international trade and financial services.
International Traders can trade PTA Futures from ZCE, either through the QFI Scheme or China’s list of Internationalized Products. However, international traders are required to go through an overseas intermediary like Orient Futures Singapore to trade in the Chinese market through ZCE Exchange.
Orient Futures Singapore also provides access to other Chinese trade exchanges such as Shanghai International Energy Exchange (INE) and Dalian Commodity Exchange (DCE). This includes commodity futures such as Dalian Commodity Exchange Soybean Futures, Peanut Kernel Futures, INE Crude Oil Futures and more.
ZCE PTA Futures Contract Specification:
The ZCE PTA Futures Contract has the following specifications:
The ZCE PTA Futures Contract has a minimum price fluctuation of CNY 2/metric ton.
Contract months are monthly all year round.
The last trading day of the contract month is the 10th trading day of the delivery month.
Zhengzhou Commodity Exchange trading hours are from Monday to Friday, at these trading hours:
Monday to Friday (except public holidays)
9:00 a.m.-11:30 a.m. 1:30 p.m.-3:00 p.m. (Beijing time)
ZCE PTA Futures symbol: TA
Purified Terephthalic Acid Price and Market News
According to the Orient Research Report on Fundamental Data of Chemicals dated 10th September 2023, PTA futures prices have been fluctuating.
From a fundamental perspective, the operating rate of downstream looms has slightly increased this week, and the inventory of polyester and weaving remains at a relatively healthy level. Although the global gasoline cracking price difference has decreased on the cost side, the operating rate of overseas Paraxylene (PX) devices is relatively low, resulting in a less-than-smooth expected decline in PX valuation in the actual market performance.
Affected by the overall slight correction in commodity valuation, PTA processing fees were once again compressed to around zero this week. With support from downstream demand, there is limited room for further compression, so we maintain the view that PTA prices will remain strong.
According to Investing.com, the ZCE Purified Terephthalic Acid price was reported at 6,020 RMB/Ton as of 11th October 2023.
Start Trading With Orient Futures Singapore
Being an Overseas Intermediary of Shanghai International Energy Exchange (INE), Dalian Commodity Exchange (DCE), and Zhengzhou Commodity Exchange (ZCE), when foreign clients participate in internationalised futures contracts in these Chinese markets with us, they have direct access to trading, clearing, and settlement. Our parent company, Shanghai Orient Futures, is the largest broker in terms of aggregated volume across the five regulated exchanges in China.
Orient Futures Singapore also currently holds memberships at the Singapore Exchange (SGX), Asia Pacific Exchange (APEX), and ICE Futures Singapore (ICE SG). Starting August 2023, corporate clients can also gain access to the B3 Exchange through us.
We provide bespoke services to our professional clients, tailored to their corporate and individual needs. Our team will be there for you 24 hours on trading days to provide a one-stop portal for all your trades, with simple processes and an intuitive user interface that has low or near-to-zero latency.
