The commodity market makes a strong comeback!
At the opening of early trading on Monday (May 22), commodities rose collectively, with ferrous products, chemicals, and non-ferrous metals seeing significant gains. Shanghai zinc rose 5.02%, thread rose 4.8%, iron ore rose 4.22%, hot coil rose 4.24%, rubber rose 3.66%, glass rose 2.82%, Shanghai nickel rose 2.8%, methanol rose 2.6%, and Shanghai lead rose 2.57% , Coke rose 2.12%.
Recently, textile raw materials including PTA in the bulk commodity market have embarked on a strong rebound. According to statistics, PTA’s main contract futures rose by more than 3.4% last week, while ethylene glycol, another textile raw material, soared by more than 16%. On Monday, PTA continued to consolidate at a high level, and ethylene glycol electronic trading reached its daily limit again in the afternoon!
At the same time, international oil prices rose by more than 5% last week. Analysts said investors were weighing lower U.S. crude inventories and signs of a widening oversupply market. Oil prices closed higher as major oil-producing countries expressed their willingness to join in production cuts.
Although it has arrived in mid-to-late May, the upstream and downstream markets have not revealed any obvious signs of off-season. On the contrary, driven by a buying mentality, the overall market sentiment has been good recently. This kind of market situation also surprised people in the industry. Is it possible that the off-season is not weak, and the market that surged last year will reappear?
PTA: There is demand for low rebound in the short term, but the pressure on the 5,000 mark still exists
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.
As far as the futures market is concerned, the processing difference has been compressed to a low level after the PTA price continued to decline. The current real-time processing fee is 250 yuan/ton, which is at a historical bottom. With the advance maintenance of existing equipment and the postponement of the resumption of production of old equipment, and considering the new investment and resumption of production of filament yarn, downstream profits are acceptable, and there are no negative factors in the short term. We are bullish on PTA in stages, and there is demand for a low rebound in futures prices. , but after a short-term rise, it faces pressure at the 5,000 integer mark.
Ethylene Glycol: Inventory pressure eased, upward momentum is strong
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, the upward trend of ethylene glycol has been formed. The market’s confidence has also gradually built up. It broke through the 6,500 yuan mark on Monday and continues its upward impact. In the short term, ethylene glycol may continue its strong “performance”.
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.
Finally, what has to be considered is crude oil, the original driver of this rebound. Although the recent extension of the crude oil production reduction agreement supported by Saudi Arabia and Russia to the first quarter of 2018 has caused oil prices to 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 in 2017 8.5%, while WTI crude oil rose by 45% throughout the year in 2016.
This shows that the overall rise in the crude oil market is weak. Under such circumstances, the OPEC production reduction meeting seems to have become a life-saving straw for the industry’s rebound. However, in fact, the production of shale oil in the United States has increased and the crude oil production of some non-OPEC countries has increased. The actual surplus pattern of crude oil has not changed. When this positive factor is gradually digested, where will crude oil go?
Overall, the crude oil weather vane may be able to guide and lead the polyester market to continue to rise in the short term, but it is unlikely to replicate last year’s sustained rally.
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