KARACHI, March 11: After tumbling over the slippery slope for over two years, the global prices of Pure Terephthalic Acid (PTA), Polyester Staple Fibre (PSF), MEG, Paraxylene and other petrochemicals have strongly rebounded over the last couple of weeks.

“International spot prices of PTA have jumped from $360 per ton to $460 per ton in the last 10 days,” brokerage, Taurus Securities writes in its Monday morning report. Other analysts note that MEG prices had also galvanised during March and were well ahead of the prices that were quoted in February. “In line with increasing costs, the global prices of PSF are now in the range of 63-65 cents per kg at Karachi Port against 60-62 cents per kg a few weeks back,” says Mohammed Sohail, head of research at brokerage, InvestCap.

A stable US economy, coupled with revival of demand from China — the world’s largest importer — is understood to have caused prices of petrochemical and related products to rise. According to InvestCap, industry sources affirm that the rising momentum in international prices could continue at least in the second quarter of the calendar 2002.

Industry sources say that post-September 11, the demand for polyester products and raw materials had witnessed a sharper fall, so that the PTA producers were found scrambling to place the product. With demand from China also on the wane, the price fall intensified further. Analysts said that the dismal scenario appeared to be changing with the long overdue recovery in prices throughout the polyester chain. They observed that with polyester capacity undergoing large scale expansion, PTA was expected to be in short supply, until at least the fourth quarter of the current calendar year, when new (global) expansion in PTA capacities were likely to come on stream.

InvestCap maintains that the rise in PTA prices augurs well for the local companies which have continued to suffer margin erosions due to depressed international prices. Dewan Salman Fibre — the largest PSF producer in the country — had posted a 30 per cent drop in profit for the first half of the year 2001-02.

InvestCap predicts a possible increase in selling prices by local producers in line with the global trend. “Local PSF producers, who were regularly reducing their prices may now feel comfortable to increase them. PSF prices had declined in the last three months by 12 per cent to be currently quoted at Rs50 per kg (without GST),” Sohail of InvestCap notes. Analysts at Taurus Securities said on Monday that they expected the domestic ex- sales tax price of PSF to see a “prompt” rise of Rs4 per kg to Rs54 per kg, from Rs50 per kg “within this month”.

Due to the long lingering gloom on the sector, all major PTA producers quoted on the stock exchange have under-performed the market index. During February, the stock in Dewan Salman underperformed the KSE-100 index by 16 per cent, whereas Ibrahim and ICI limped behind the index by 4 and 8 per cent, respectively.

“Once the news (of spiral in international prices of PTA) hits the market, the synthetic stocks: Pakistan PTA (Rs5.15); Dewan Salman (Rs15.35); Ibrahim Fibre (Rs14.50) and ICI (Rs 48.85) may witness speculative interest,” says Sohail.