Since March, PTA prices have changed from the decline in February and continued to rise, currently exceeding 5,900 yuan/ton. It has increased by 400 yuan/ton since January this year, an increase of 7.27%, the highest peak since October 2022.
Last week, the PTA market price first weakened and then strengthened, showing an overall upward trend. Why did PTA change direction and start moving higher? It has climbed to the highest level during the year and is even expected to reach the level of the same period last year!
Multiple sets of equipment were inspected and the load continued to decrease.
This week, Sichuan Neng Investment has stopped, and Yishenghua 1# has dropped its negative after restarting, and 2# has dropped its negative. Next week, Hengli Petrochemical plans to carry out maintenance, Honggang Petrochemical may carry out maintenance, and the equipment has been reduced or stopped or continued maintenance. Domestic PTA output this week was 1.061 million tons, -17,500 tons compared with last week.
Judging from the specific operating rate, PTA’s operating load is currently at 69.65%, a year-on-year decrease of 3.96% from last week, and has continued to decrease slightly every day since the beginning of the year. Supply and demand have decreased significantly, and demand has been relatively stable, which has provided some support to PTA.
Polyester production is running at a high level, and PTA is destocking in stages
As the traditional peak season for textiles, polyester manufacturers performed better in destocking in March, and their operating rates remained high. According to statistics, the current average load of polyester is concentrated around 85.69%, and there is a continuing upward trend. The overall start-up rate of the downstream weaving market is also around 80%. Since the beginning of the new year, the market situation has improved, the delivery speed of gray cloth has accelerated, and the inventory has decreased slightly. Now coupled with the stimulation of the traditional peak season, it is expected that the operating rate of the polyester market will remain high in March to meet the rigid demand of the weaving market, and there may still be room for a slight increase in the market outlook.
Under high-load operation of downstream factories, PTA destocking is significant. As of March 8, 2023, China’s PTA inventory was 3.0744 million tons, a decrease of 11,400 tons from the previous period. With the continuous maintenance of PTA equipment in the market and the high operating load of domestic polyester production, the demand for PTA is bound to be stable or increase, so PTA will surely enter a phased destocking phase.
Affected by the continued high polyester load and the maintenance of PTA equipment, the PTA inventory has dropped to a low level, which is the main reason for the surge in PTA this time. However, it is difficult to continue to improve supply and demand, and market prices are gradually weakening. In short, PTA is still surrounded by bears.
Device restart, load increase
From the perspective of equipment, early parking and load reduction devices are planned to be restarted, such as Huaya, Jinlun, etc., and new devices are gradually increasing the load, such as Xintuo, Hengchao, etc. It can be seen that the supply of PTA is difficult to decline rapidly in the short term, and the supply continues to increase.
Downstream demand recovery remains to be seen
Although the downstream industry is in the traditional peak season, the popularity of “gold, three, silver and four” has not really arrived. It remains to be seen what the follow-up situation will be and the actual demand recovery will be. If the peak season is expected to be weak, the production enthusiasm of weaving factories will decrease, the polyester load may also decrease, and the destocking of PTA will also be affected.
Loss of cost-end crude oil support
On the macro front, the news of the Federal Reserve raising interest rates had a greater impact on international crude oil, which immediately ended its five consecutive gains. The U.S. Energy Information Administration (EIA) reported that U.S. crude oil inventories fell for the first time in 11 weeks last week, but the news of the inventory decline did not support oil prices. Without the support from the cost side, it is difficult for PTA prices to continue to improve.
Editorial
Generally speaking, in the short term, PTA demand will be supported steadily, industrial supply and demand will be healthy, and processing fees will be restored. In the long term, the external wind direction is uncertain, and capacity expansion and demand recovery will restrain the market. Terminal consumption is still insufficient, the contradiction between supply and demand has been significantly improved, and the PTA market is still under pressure.
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