On the evening of August 19, a rare astronomical spectacle of “five stars in a row” was staged in the night sky. Five planets, Venus, Jupiter, Mercury, Mars and Saturn, appeared in the night sky at the same time, approximately forming a line. Five stars in a row is also called “five stars gathering”. In ancient times, the five planets of water, metal, fire, wood, and earth appeared in the same part of the sky at the same time. This phenomenon did not happen often, so the ancients thought it was an auspicious sign. However, global commodities fell sharply yesterday. Singapore iron ore futures fell 12%, Dalian Commodity Exchange iron ore futures fell 7%, LME copper prices fell to a four-month low, and LME tin prices plummeted 11%.
WTI crude oil futures fell more than 4% intraday
International oil prices continued their decline on Thursday, falling for six consecutive trading days, the longest consecutive decline since February 2020. WTI crude oil futures once fell by 4% during the session, and Brent crude oil futures once fell by more than 3% during the session, both hitting their lowest points since May 2021. The resurgence of the epidemic, the strengthening of the U.S. dollar, and the Federal Reserve’s hint that it may taper during the year are all factors that have caused the oil price to plummet.
Ed Morse, head of commodity research at Citibank, believes that OPEC+ may suspend the next production increase due to the collapse in oil prices.
As of early morning closing this morning, WTI crude oil futures for September delivery on the New York Mercantile Exchange fell 2.70% to close at $63.69/barrel; Brent crude oil futures for October delivery The price dropped by 2.61% to close at US$66.45/barrel.
Yesterday, domestic commodity futures weakened across the board, with most varieties closing lower. As of yesterday afternoon’s closing, iron ore fell by more than 7%, and rebar, crude oil, stainless steel, international copper, Shanghai copper, glass, PTA and other products all closed down more than 3%. Coking coal futures were “outstanding”. The coking coal 2111 contract rose 8% to 2,632.5 yuan/ton; the 2110 contract rose 7.99% to 2,722.5 yuan/ton; the 2109 contract rose 7.99% to 2,723 yuan/ton.
Yesterday, the China Iron and Steel Association stated that due to the increasingly severe international environment and the slowdown in domestic economic growth, the demand for steel products in the domestic market has weakened in the later period. Affected by production cuts and production restriction measures, the steel market is expected to be temporarily tight. The China Iron and Steel Association pointed out that two aspects need to be paid attention to in the later period. First, judging from the domestic market situation, the steel industry is facing a situation of production reduction, and the intensity of steel demand in downstream industries is also weakening. A new balance between supply and demand is expected to be formed. Iron and steel companies should carefully analyze market changes, actively adjust product mix, and maintain the smooth operation of the market; second, the prices of coking coal and coke have risen sharply, and the pressure on companies to reduce costs and increase efficiency is still there. According to monitoring by the Iron and Steel Association, on August 13, the price of coking coal was 2,635 yuan/ton, a month-on-month increase of 11.89%; the coke price was 2,848 yuan/ton, a month-on-month increase of 10.64%. However, steel prices fell by 0.53% month-on-month during the same period, and the pressure on steel companies to reduce costs and increase efficiency will still remain in the later period.
The bulls and the bears are engaged in a tug-of-war. Where will PTA go?
Yesterday, PTA futures fell 3% to close at 4,976 yuan/ton. Dai Yifan, an energy chemical analyst at Nanhua Futures, believes that from a cost perspective, the cost of PTA remains high. Although crude oil has fallen 10% from its recent high, the prices of PTA’s upstream raw materials naphtha and PX have performed very strongly. The price of PX in the external market has been nearly two The price of naphtha has been stable at US$900-950/ton in the past two months, and the price of naphtha has been stable at US$650-700/ton in the past two months. Judging from the cracking price difference, the cracking price difference between PX and naphtha in the past two months is approximately US$250. Although it is significantly higher than the level during the epidemic last year, it is still lower than the average level of US$313 in the past three years.
From a fundamental point of view, Dai Yifan believes that the supply and demand of PTA in July were tighter than expected, with the cumulative destocking reaching 250,000 tons, and it is expected to reach about 100,000 tons in August. As of the end of last week, PTA social inventory was approximately 2.13 million tons, and factory inventory was approximately 450,000 tons, both of which were near the lows of the year. There is no pressure to accumulate inventory for the time being.
“Although the partial tight supply of PTA continues, its downstream demand is changing. Among them, the PTA processing fee has averaged about 700 yuan/ton in the past month, which is the highest level this year. Near the high point, the profits of PTA companies are relatively good, but the cash flow situation of PTA downstream polyester companies continues to deteriorate due to high costs. We understand that in addition to POY and DTY, which still have cash flow, staple fiber, bottle flakes, and chips have already Continued losses, FDY suffered a small loss. Weaving orders have weakened across the board in recent times, including velvet orders that performed relatively well in the early stage. They have also temporarily come to an end, and the home textile business continues to decline.” Dai Yifan further said, therefore, in addition to early staple fiber and bottle flakes, , chip production reduction, some major polyester manufacturers intend to reduce production of FOY and POY. If the production reduction is implemented, the polyester load will drop to 88-89% in August.
Zhou Ao, an energy researcher at Everbright Futures, believes that in the short term, the main port will be closed due to the impact of the typhoon, and the flow of goods at the port will be difficult. In addition, the supply and demand side is tight, and the price of PTA is expected to be Still maintaining a strong trend. It is recommended that investors pay attention to the impact of power cuts in some areas on the operating rates of polyester and weaving processes, as well as the implementation of maintenance of domestic PTA factories under the current relatively comfortable processing fees. </p
