At 16:00 Beijing time on Thursday (May 25), the 172nd OPEC Conference was officially held in Vienna, Austria! OPEC representatives said that OPEC agreed to extend the production reduction agreement for nine months to March 2018.
The delayed production cut plan at this OPEC meeting is in line with market expectations, but the decision not to expand the scale of production cuts disappointed investors, who originally expected OPEC to introduce more active measures to boost oil prices.
At 13:30 New York time on May 25 (2:30 Beijing time on May 26), the NYMEX July crude oil futures contract closed down $2.46, or 4.8%, with a settlement price of $48.90 per barrel. Brent crude oil for July delivery closed down $2.50, or 4.6%, to settle at $51.46 a barrel. This is the largest single-day percentage decline for the two major crude oil benchmarks since March 8!
At the same time, on the night of the 25th, PTA’s main contract futures and ethylene glycol electronic trading also fell by more than 1.6%.
Since the recent rise in crude oil prices has only been supported by the expectations of the OPEC meeting, now that all the good news has been exhausted, the reality of buying expectations and selling prices is immediately reflected.
So, will the crude oil market, which has lost the life-saving straw of production cuts, enter a dilemma? Where will the polyester and polyester market go in the future? Below, the editor makes a brief analysis from the upstream and downstream fundamentals:
PTA: There is demand for low rebound in the short term
Overall, PX equipment is still undergoing maintenance in June, and the supply and demand side of PTA itself is also expected to tighten due to equipment maintenance. (Among them, we need to focus on the start-up of Jinshan Petrochemical and Taiwan Chemical, as well as the maintenance plan of a 2.2 million PTA device in Yisheng). In addition, terminal weaving has not yet entered the off-season, and the demand side is not expected to be pessimistic.
Although the spot price of PTA has rebounded recently, due to the rising upstream costs, the operating conditions of PTA production companies have not improved. The current real-time processing fee is 250 yuan/ton, and most companies in the industry are experiencing significant losses. Taking into account the rising prices of crude oil and PX, the center of gravity of PTA costs will continue to move upward, while there is almost no room for compression of PTA processing fees. The price of PTA has a demand for a low rebound in the short term, but without the support of crude oil, the upward trend of PTA will be more difficult in the future. .
Ethylene glycol: inventory pressure eased, market confidence remains
From a fundamental point of view, due to the recent delivery stage, market demand for spot goods continues to support the price of ethylene glycol, and some merchants also have short order covering operations, further consolidating the support effect on the demand side. In addition, inventories fell last week, and the possibility of continuing to decline this week still exists. The supply side is also positive at this time.
In addition, the performance of related products such as styrene and PTA has also improved. Driven by this, market confidence has gradually been built up. However, affected by today’s sharp decline in raw materials, the upward pace of ethylene glycol may slow down in the short term.
Polyester filament: How long will the “baton baton” of price increases last?
Last week, due to the sharp rise in polyester raw materials, especially MEG, downstream buying enthusiasm was high, and the average production and sales in the five working days were 170-180%. Polyester factories have successfully destocked. As of last Friday, the stocks of POY, FDY and DTY in Jiangsu and Zhejiang polyester factories were 8.3, 13.1 and 24.2 days respectively.
At present, although it has entered late May, judging from the shipment and production situation, the Shengze fabric market has not yet clearly felt the arrival of the off-season. The start-up of weaving factories and texturing factories is relatively stable, at 80-90%, and manufacturers have many orders on hand to execute. Therefore, from the perspective of supply and demand for polyester filament itself, there is still support.
Finally, what has to be considered is crude oil, the original driver of this rebound. Although the recent news of new production cuts has helped oil prices rebound strongly in the short term and stabilize at US$50, from a full-year perspective, as of May 18, WTI crude oil still fell by 8.5% in 2017, while WTI crude oil fell by 8.5% in 2016. The increase reached 45%.
This shows that the overall rise in the crude oil market is weak. Under such circumstances, the OPEC production reduction meeting became a life-saving straw for the industry’s rebound. In addition, the market still faces threats from U.S. crude oil production. In fact, U.S. shale oil production has increased and some non-OPEC countries have increased crude oil production. The actual surplus pattern of crude oil has not changed.
Today, the “life-saving straw” of the OPEC production reduction meeting has become a “black swan”, and the oil price has fallen below the “bottom of $50”. Under the guidance of the loss of crude oil weather vane, the polyester market may have many difficulties if it wants to continue to rise.
</p
