Zhengzhou’s terephthalic acid futures contract may have an unfamiliar name, but its use in making polyethylene terephthalate plastic bottles makes it a common sight. In November last year, we noted “plenty of room on the upside [for prices]”. The pace has picked up again following the Lunar New Year holiday, as has observed volatility, which is now well above the mean regression of the past three years. Over this period, the market formed a gentle rounded base, a chart pattern that will be completed on a close on Wednesday above 5,700 yuan (US$902) per tonne. A close above the psychological level of 6,000 yuan should add to bullish momentum and create a rush to the 8,000-yuan area by the summer.

Nicole Elliott is a technical analyst