The PTA market has been weak recently, and the market price continues to break new lows. On the one hand, the cost side is low and fluctuating, and the upward surge in international oil prices is insufficient. On the other hand, the supply and demand of PTA itself has weakened. With the maintenance of PTA equipment still unclear, the supply and demand destocking pattern is likely to shift to the accumulation of stocks. trend.
1. Strong cost support
U.S. Gulf crude oil production has not yet All have recovered, and U.S. commercial crude oil inventories have dropped to their lowest point in the past two years. Coupled with the weakening of the U.S. dollar, international oil prices have risen. But on the other hand, although the OPEC meeting decided to maintain its previous plan to increase production slightly month by month, the global epidemic has caused market concerns about the economic and demand prospects. Therefore, the overall upward surge in international oil prices may not be enough.
In terms of PX, it is understood that the current operating rate of PX remains at 78.42%, the supply of goods is still relatively tight, and the price is relatively stable. The PX cracking spread has been falling since early March. It has been in a state of constant repair. The current PX cracking spread has been maintained at around US$250/ton. As long as crude oil has not changed significantly, PX’s short-term cost support for PTA is acceptable.
Figure 1: Crude oil-PX-PTA price chart
Data source: Wind
2. Supply is expected to increase in the future
In terms of supply, PTA output in August was 4.4236 million tons, a month-on-month decrease of 91,500 tons, or 2.03%. PTA’s average monthly operating rate is 74.21%. Most of the PTA’s installations stopped unexpectedly that month. Among them, the 3.6 million-ton unit of Yisheng New Materials was shut down at the end of July and gradually returned to stability in late August; two units of Ningbo Taihua, Luoyang Petrochemical, Sanfangxiang Line 2, and Honggang Petrochemical resumed operation after unexpected shutdown; Energy investment units in Thailand and Sichuan were shut down for maintenance; Fuhai Chuang gradually resumed stable operation in the first half of the year. Therefore, due to the short-term shutdown of some equipment and the recovery of new material equipment that was not as expected, the output has declined.
Figure 2: PTA monthly output (10,000 tons)
Data source: Longzhong Information
It is understood that Sanfangxiang Line 1, Xinjiang Zhongtai and Sichuan Energy Investment Equipment in early September There are expectations for a restart, and there are expectations for an increase in supply. The news about the maintenance of the PTA device in September is still unclear. Recent market rumors have said that the 2.5 million tons unit of Honggang Petrochemical may be overhauled for half a month in September. In addition, it is said that a PX device in Dalian may be overhauled in September. At that time, we also need to pay attention to Dalian. Whether the PTA device will enter the maintenance state. According to Longzhong Information, whether Dalian PTA equipment is currently under maintenance, the official has not yet announced the maintenance information. At the same time, the inventory of PX is relatively loose. If PX has equipment maintenance, the PTA equipment also has a buffer time. We estimate that it will take half a month to overhaul a large equipment, and the PTA output in September will be about 4.6 million tons. However, if there is no equipment maintenance in September, PTA output will reach over 4.7 million tons. In terms of inventory, as of this week, PTA social inventory is approximately 3.1518 million tons, an increase of 9,300 tons from last week, and a month-on-month increase of 0.30%. The social inventory of PTA has moved upward, mainly due to the decrease in polyester load, the increase in the supply side of PTA, and the weak increase in supply and demand. Exports also declined slightly, and under the overall impact, PTA social inventory showed an upward movement.
Figure 3: PTA weekly social inventory
Data source: Longzhong Information
3. The downstream market is dominated by rigid demand
From a downstream perspective, the polyester end is subject to risks of low cash flow and rising inventories, which has led some companies to reduce production. Demand began to weaken in the second half of the year, and the downstream operating rate has declined. As of September 2, domestic polyester Ester production started at 82.66%, which was significantly lower than the previous period.
Figure 4: PTA downstream operating rate (%)
Data source: Wind
The output of the polyester industry in August was 4.9539 million tons, a month-on-month decrease of 3.41%. The average monthly load was 87.75%, down 3.33% from the previous month. The main reason for the decline in industry output and load is that, with the same number of days, August was double dragged down by demand and efficiency. The domestic polyester industry’s new equipment production plans were delayed, and factories began to reduce production and overhaul, involving all polyester products. product. Under this influence, the daily output data of the polyester industry during the month fell to the same period last year. This caused a significant decline in the output data during the month, so polyester production declined during the month. There are plans to put equipment into production in the domestic polyester industry in September. For example, Huabao Chemical Fiber is scheduled to be put into production, and the polyester production capacity base will further increase. However, it is still necessary to pay attention to the subsequent production reduction and resumption of production of domestic polyester industry equipment in the later period. There are only 30 days in September, and domestic polyester output may decline within a narrow margin. The output in September is expected to be approximately 4.89 million tons.
Figure 5: Polyester production trend chart
Data source: Wind
To sum up, in August the PTA device was temporarily shut down unexpectedly and the recovery was not as expected, and the overall supply increased. The polyester end is subject to the risk of low cash flow and rising inventories, which has led some companies to cut production and demand began to weaken in the second half of the year. However, based on the overall supply and demand situation, although the extent of destocking in August has been reduced, the still continues. The maintenance of the PTA supply side in September is not clear. Although the adjustability is strong, there are still expectations for an increase in supply. However, the news of the resumption of production of the polyester end units that have been reduced in the early stage is not yet clear, and there is an expectation of weak demand. Therefore, under the expectation of loose supply and weak demand, we predict that PTA is likely to accumulate inventory, ranging from 40,000 to 140,000 tons. In the market outlook, we still need to pay close attention to the maintenance news of the equipment of major PTA manufacturers and the resumption of production at the polyester end.
4. Summary and suggestions
Overall, recent crude oil supply emergencies and There is support for risk appetite to become stronger, but the room for growth is expected to be limited under the circumstances of accelerating supply growth and weak demand, and the Fed will shrink its balance sheet sooner or later, which is not good for risk appetite. In the long run, crude oil prices may be under pressure, PTA costs and mentality Support or not strong. From the perspective of supply and demand, terminal demand has not improved at present. Polyester factories have concentrated on implementing production reduction plans, and polyester factories mainly implement contracts. Under rigid demand, they mainly focus on sporadic replenishment. Market trading is light, while PTA spot is abundant, and the basic situation is The difference remains relatively weak. Overall, supply and demand are negative. It is expected that the PTA period will be difficult to change in the short term. In terms of operation, it is recommended to operate on a rolling basis. Short orders at early highs can be considered to continue to be held for the time being. Those who are prudent are advised to wait and see for the time being.
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