Introduction: Since Valentine’s Day, the domestic PTA market has continued to decline, and the atmosphere for on-site negotiations has been weak. However, international oil prices have rebounded significantly recently, with signs of being close to the bottom, and PX prices are expected to pick up, providing cost-side support. Strong, then will the domestic PTA market synchronize with the raw material market and enter a rebound stage?
Supply shrinks and pressure eases.
From the supply side, the current operating rate of domestic PTA remains at 68.55%. The current maintenance and planned maintenance capacity has reached 5.25 million tons, and the loss has reached 200,000 tons. Therefore, the monthly output has declined in May and the supply pressure has been alleviated. In addition, regarding Far East Petrochemical’s resumption of production, there are optimistic estimates that it may restart in the second half of the second quarter, but some market participants believe that it may not be able to resume production until the third quarter. Xianglu Petrochemical is still in the process of restructuring, and it may be difficult to resume production within the year. Therefore, the relief of supply pressure in the later period will help stabilize PTA prices.
Polyester inventories have begun to decline, and the demand side has performed well.
In the early stage, driven by the rising market, the terminal industry actively stocked up. However, currently, peak season demand has not arrived as expected. Therefore, polyester filament inventory was once at a high level, with POY inventory reaching more than 20 days. However, polyester factories are making considerable profits. , although prices fell simultaneously with the raw material market, the decline was limited to cost-driven decline, and the actual factory profitability did not fluctuate much. As of now, the profit of polyester filament is 197 yuan/ton, POY inventory remains around 11-18 days, the profit of polyester staple fiber is 347.5 yuan/ton, and the inventory remains around 7-16 days.
The production cut agreement numbers are strong, and crude oil is expected to stabilize and rebound.
Currie said at a Platts conference in London that day that the Organization of the Petroleum Exporting Countries (OPEC)’s compliance with the production reduction agreement is very strong. In addition, OPEC and non-OPEC oil-producing countries such as Russia have promised to reduce production by 1.8 million barrels per day in the first half of this year to support the oil market. Although high supply has pushed oil prices below $50 a barrel again, this has pressured OPEC to extend its production reduction agreement until the end of 2017. Oil prices have rebounded significantly in recent days, with signs of being close to the bottom, and PX prices are expected to pick up, with strong cost-side support.
Taken together, the fundamentals of supply and demand in the PTA market have not seen significant fluctuations recently, and the current macro and financial factors have significantly increased their influence on PTA trends. As a result, even if its own stage of destocking starts, it will be difficult to reverse the weak linkage of the chemical sector in the short term. However, the current international oil prices may show signs of bottoming out, PX market prices are expected to pick up, and there is good support for the market on the cost side, so the PTA market may have a phased recovery in the short term. In the near future, we need to wait and see for further guidance after the near-month delivery next week.
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