Plastic Feedstock Margin Rally Seen Boosting Reliance, IndoramaBy
PTA margins are 50% higher year-to-date, Morgan Stanley says
Recent margin increase driven by outages in China, India
Thailand’s Indorama Ventures Pcl and India’s Reliance Industries Ltd. will benefit the most from a surge in prices of a petrochemical used to make plastic bottles and synthetic clothing, according to Morgan Stanley.
Profit margins for purified terephthalic acid in Asia have soared at a faster-than-expected clip of 50 percent this year and may consolidate around current levels before advancing by another 25 percent in 2019, Mayank Maheshwari , the bank’s equity analyst, said in an April 16 research report.
Report says PTA margins in Asia are currently 15 percent above Morgan Stanley’s estimates, making it one of the best performing chemicals across the bank’s coverage:
- Recent rally driven by outages in India and China, representing about 15% of global capacity
- Recovery comes despite rise in costs of paraxylene, main PTA feedstock, suggesting there could be further market tightness in 2019
- New capacity growth over the next 18 months seen “very limited” at 2m tons/year
- Just 10%-15% of mothballed PTA capacity in Asia likely to restart by end 2018