International oil prices staged a deep V trend
On September 26, international oil prices rebounded after hitting a two-week low, showing a deep V trend. As of the close of the day, the November contract of WTI crude oil futures closed at US$90.39/barrel, an increase of 0.79%; the November contract of Brent crude oil futures closed at US$93.96/barrel, an increase of 0.72%.
Oil supplies remain tight as Russia and Saudi Arabia have announced they will extend production cuts until the end of the year. Earlier this month, oil prices hit 2023 highs after Saudi Arabia said it would continue to cut production by 1 million barrels per day until the end of the year, and Russia also said it would take action to reduce exports by 300,000 barrels per day.
Data released by API on Tuesday showed that U.S. crude oil inventories increased by about 1.6 million barrels in the week ended September 22, gasoline inventories fell by 70,000 barrels, and distillate inventories fell by about 1.7 million barrels. Analysts had expected U.S. crude oil inventories to fall by about 300,000 barrels last week.
Why is the polyester sector all green?
Yesterday, most chemical products fell, and the overall commodity atmosphere was bearish. The polyester sector was all green. Among them, paraxylene fell the most, hitting a new low since its listing. PTA, MEG and other varieties all showed varying degrees of decline.
Why did the polyester sector, which had risen sharply in the early period, collectively move down in the near future?
Zhong Meiyan, assistant director of Everbright Futures Research Institute and energy director, told reporters that on the one hand, the positive factors on the demand side in the early stage have weakened, crude oil prices have fallen from highs, the demand for the “Golden Nine and Silver Ten” has been front-loaded, and the burden reduction on terminal devices has been realized. In late September, polyester The equipment load suddenly dropped from the high level, and the maintenance of several large equipment in Xiaoshan area reduced it to less than 90%. On the other hand, as the Mid-Autumn Festival and National Day holidays are approaching, the market has a strong risk aversion in the week before the holiday, and PTA, MEG and other products have reduced their positions. Downward.
“Since last week, oil prices have adjusted to a high level, and downstream chemicals have fluctuated with the cost side. In addition to the drop in oil prices, the recent drop in gasoline has led to weaker demand for oil adjustments, and changes in the upstream and downstream supply and demand have caused PX prices to also fall in stages.” Zhang Zhengze, an energy analyst at Guohai Liangshi Futures, said that from the perspective of the entire polyester industry chain, the weakening of the cost end and some negative changes in the supply and demand margins of various links in the industry chain have put the polyester sector in a temporary adjustment cycle. However, judging from the comparison of the overall strength of the industry chain, the upstream cost-end prices are still strong, and the logic of strong cost-end support remains unchanged.
In fact, global crude oil supply is still judged to be tight. Xie Wen, chemical analyst at Wuchan Zhongda Futures, said that global crude oil demand is still on a growth path, and the rise and fall of crude oil prices is dominated by demand. In mid-September, global refineries began to enter autumn inspections. Major refineries in the United States and India have entered autumn inspection, and the Middle East will also enter the inspection season. From the perspective of refined oil products, gasoline has entered the off-season, EIA data table demand has weakened month-on-month, and diesel has shifted from off-season to peak season. After refineries in India, Russia, and the Middle East enter maintenance, diesel cracking spreads may still rise, thus supporting oil prices. In addition, U.S. jet fuel inventories are about to enter a seasonal destocking period. Before the end of the maintenance in November, the upward momentum of crude oil has slowed down.
“It is worth noting that the recent profits of the polyester industry chain are still concentrated at the PX end. Therefore, changes in cost and price have a greater impact on the market.” Xie Wen said that with the arrival of the off-season for gasoline, the gasoline crack spread has weakened. As the crude oil price range moves downward, PX prices weaken. Although PTA processing fees are at a low level, under the background of “integration”, PTA operating rate has not changed much. As of September 25, PTA operating rate was 84.5%, polyester operating rate fell from 91% to 86.21%, and PTA inventory accumulation The pressure margin rises. Therefore, under the circumstances of cost drag and marginal increase in cumulative warehouse pressure, the PTA price range has moved downwards, and short fiber has also been affected by PTA prices and has been running weakly.
According to Zhong Meiyan’s analysis, in terms of total volume, the PX units in Asia that have been reduced in load and shut down in the early stage will gradually recover in October. In particular, the load recovery of the 9 million-ton unit of Zhejiang Petrochemical, a large unit, will bring about an increase in output of about 300,000 tons. There are many PTA devices that will be shut down for maintenance in October. Southwest Energy’s 1 million ton device will be shut down for maintenance until late November. Yisheng Petrochemical’s 2.2 million ton device will start maintenance on October 9. Ineos’s 1.1 million ton device will be shut down for maintenance in mid-October. PTA output in October suffered maintenance losses of at least 250,000 tons. It is expected that the load of the PTA device will decline in October and the PTA accumulation rate will slow down.
“From the perspective of demand, there are still many uncertainties in the downstream domestic sales and exports of domestic polyester.” Zhong Meiyan said that in terms of polyester equipment, the early maintenance equipment will be restored after the National Day holiday. After the holiday, the polyester load is expected to increase slightly. pick up. In addition, there are still about 1.7 million tons of new polyester equipment planned to be put into operation in the fourth quarter. The overall new production capacity is large and the demand support is strong.
“In terms of valuation, the current profits of the polyester industry chain are still mainly concentrated on the cost end. The price difference of PXN is more than 400 US dollars/ton, while PTA continues to have low processing fees, around 160 yuan/ton. Polyester and downstream demand The profit of this link is low. With PTA’s low processing fee repair expected, the possibility of unplanned maintenance still cannot be ruled out.”Zhengze said.
In terms of exports, according to Zhong Meiyan, the BIS certification implementation time for my country’s polyester filament FDY and POY currently exported to India will expire on October 5, 2023. Previously, my country’s polyester filament exports hit a new high in August, growing 21.6% month-on-month to 371,100 tons. If the policy continues to be extended, exports of polyester yarn to India may pick up again in November, and polyester yarn exports for the whole year will increase significantly year-on-year.
Looking forward to the market outlook, Zhang Zhengze reminded that in the near future, the polyester sector is still mainly adjusting to follow the fluctuations in cost-side oil prices. He is paying attention to the pressure on PX prices caused by oil price fluctuations and the continued weakening of oil demand at the end of the peak travel season, as well as whether the subsequent demand-side loads can be as scheduled. recover.
Zhong Meiyan believes that the risk aversion in the market continues before the National Day, and there is room for further decline in positions in various varieties of the polyester industry chain. There are uncertainties in demand support after the National Day. The degree of export recovery needs policy guidance. Upstream and downstream equipment PX restarts and PTA maintenance coexists. It is expected that the prices of polyester industry chain varieties will follow the cost end. Later, we will pay attention to the implementation of equipment maintenance and restart, as well as the extension of BIS certification in India.
In Xie Wen’s view, cost is still the key factor that dominates the price of the polyester industry chain. The September monthly reports released by the three major energy agencies IEA, OPEC and EIA all believe that the oil market will be in short supply in the fourth quarter. Judging from the current situation, the United States may raise interest rates once more in the fourth quarter, but the magnitude of the rate hike is within expectations. In addition, Saudi Arabia has a strong ability to control prices, and non-OPEC cannot increase production on a large scale. Even if oil prices fall, the extent may be limited. Oil prices are likely to remain high in the fourth quarter, with an estimated range of US$80-100 per barrel. It is necessary to pay attention to factors such as the situation between Russia and Ukraine, the return of Iranian oil to the market, and macro tail risks.
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