The collapse of crude oil prices caused most chemical products to plummet. PTA even fell below 4,000 yuan/ton and continued to fall, hitting new lows since its listing. As of March 19, the main PTA 2005 contract has once again dropped to the limit of 3,456 yuan/ton, down approximately 30.6% year-to-date.
Judging from the lows of crude oil and PTA prices in 2016, PTA prices have hit a new low since its listing, and above Crude oil is still slightly higher than the low in 2016, and PTA is already in an oversold state. Moreover, the added value of industries above designated size nationwide from January to February 2020 has been further confirmed. From January to February, the added value of industries above designated size actually fell by 13.5% year-on-year. In February, the added value of industries above designated size decreased by 26.63% from the previous month. Among them, the textile industry dropped by 27.2%, and the manufacturing industry of chemical raw materials and chemical products dropped by 12.3%. From a data point of view, the decline in the textile industry is nearly twice that of chemical raw materials, which is at a low point in recent years.
According to Liu Siqi, an analyst at Haitong Futures, as domestic large-scale refining and chemicals are put into production, PTA has fully entered a cycle of oversupply and accumulation since the fourth quarter of 2019. Industrial chain processing fees have been rapidly reduced to low levels, and the new crown pneumonia epidemic broke out in the country. , the demand for textile and apparel in the terminal sector has been sluggish or even declining, and the start of weaving factories has been significantly delayed due to problems such as personnel arrival, which has worsened the PTA supply and demand pattern. From January to February alone, PTA social inventory accumulated more than 1.5 million tons. Overall, Social inventory has reached more than 3 million tons, a historical high in the past five years.
However, the biggest obstacle comes from upstream crude oil. “The collapse of crude oil became the last blow to overwhelm PTA prices. The cost side dropped sharply. Under the weak fundamentals of the industrial chain, the overall price center of gravity moved downward with crude oil. According to our statistics, domestic energy Chemical varieties have seen a rise or fall since the beginning of the year, with crude oil falling the most at 47.7%, and PTA becoming the category with the largest fall after asphalt and fuel oil energy varieties, with a fall of 24.3%,” Liu Siqi said.
Infact,mycountryisamajortextileandclothingproductioncountry,andtheepidemichashitdomesticdownstreamtextileandclothingdemand.Duetothegoodcontrolofthedomesticepidemic,thedomesticterminalloadhasrecoveredrelativelyquickly.AsofMarch13,thetexturingmachineloadhasrecoveredto67%,theloomloadhasrecoveredto61.8%,andthepolyesteroperatingratehasreboundedtomorethan80%.Weareseeingsignsofstart-uponeafteranother.However,accordingtoLiuSiqi,althoughthedomesticepidemicsituationisstable,itisstillintheoutbreakperiodoverseas,andterminalordersareweak.Theinventorydaysofdownstreamfinishedproductsaremorethan38days,theinventoryofrawmaterialsisabouthalfamonth,andtheinventoryofweavingrawmaterialsandfinishedproductsishigh.FactoriesCashflowisnotsufficient,andtheprocurementofrawpolyesteryarnscontinuestomaintainrigiddemand.
LiuSiqisaidthatfromthecurrentsupplyanddemandpattern,JialongPetrochemical,HanbangPetrochemicalSmallLine,Fuhaichuang,HengliPetrochemical,andPengweiPetrochemicalareintheparkingstage,andZhuhaiBP’s1.25milliontonunitisscheduledformaintenance.Atthesametime,ReignwoodPetrochemical’s1.4million-tonunitplanstorestart.Duetothehighinventorypressure,theprobabilityofunexpectedequipmentshutdownandloadreductionhasincreased.
Intermsofdemand,thepolyesterendwillfurtherresumework,ofwhichLuoyangShihua50,000tons,FujianBaihong200,000tons,FujianJinlun200,000tons,ZhangjiagangXinxin150,000tons,andLiaoningTianlong250,000tonsareexpectedtorestartnextweek;Atthesametime,thedemandsideissteadilyincreasing,andterminalloomsaregraduallyrecovering.ThePTAsupplyanddemandpatternhasimprovedtoacertainextent,buttheimprovementisonlyreflectedintheexpectedreductionininventoryaccumulation.Consideringthatpolyesterinventoryisalsoatahighlevel,itisstilldifficultforfutureloadstofurtherreturntothesameperiodinthepastunderthebackgroundofpoordemand.PTAisstillinTiredlibrarychannel.AsofMarch17,thePTAunitoperatingratedroppedto69.17%,mainlyduetothe4.5milliontons/yearPTAunitofFuhaichuangbeinginspectedfor10-15daysnearMarch12;the2.2milliontons/yearPTAofHengliPetrochemicalLine3ThedevicestartedmaintenancefortwoweeksonMarch12;Xinfengming’s 2.2 million tons/year device entered maintenance for half a month on the 17th, but the effect was minimal judging from the feedback from the disk.
“PTA continues to break new lows, and the market keeps asking, where is the bottom of PTA? Under the historic market, will there be a historic opportunity for bargain hunting?” Liu Siqi said that the root cause of the current plunge in PTA and even the entire chemical sector is Due to the sharp decline in costs, PTA’s processing fees have increased slightly compared to before the plunge. The key to the stabilization and rebound of PTA is to pay attention to changes in the crude oil market. According to the change ratio between PTA and crude oil, for every US$1 change in crude oil and the processing fee remains unchanged, the absolute price of PTA is expected to change by about US$39. Based on the pricing relationship between PTA and crude oil, the PTA price corresponding to different crude oil prices is calculated. If calculated according to the bottom range of Brent crude oil of 20-25 US dollars/barrel, the bottom range of the corresponding price of PTA is expected to be around 3100-3300 yuan/ton.
Infact,fromtheperspectiveofcrudeoil,WIThasfallentoaroundUS$20/barrel,andforproductioncostsaboveUS$40/barrel,cashflowForU.S.shaleoilcompanieswhosecostsexceedUS$20perbarrel,thecurrentoilpricewillinevitablyleadtodebtorevenbankruptcyforsomeproductioncompanies.�Crisis,lowoilpriceshaveledtotheclearanceofproductioncapacityandcontractionofsupplytoachievearebalancingofsupplyanddemand.“Therearestillnoobvioussignsofimprovementintheoverseasepidemicsituation,OPEC+hasnotreturnedtothenegotiatingtable,andnofurtherupwarddrivehasbeenseenafterthebottomofoilpriceshasbeenconsolidated.Therefore,evenifPTAisbargain-huntingatitscurrentposition,itwillhavetobeartheconsequencesofrepeatedoverseasepidemicsandincreasedpricefluctuations.Risk.Excludingtheimpactofcrudeoil,thecurrentfundamentalsofPTA’slargeinventoryaccumulationdonotsupportasharpreboundinPTAprocessingfees.Inordertoalleviatesalespressure,factoriesconductlarge-scalehedging,whichmayfurthercompressPTA’sprocessingfeesduringtheprocessofrisingcosts..Therefore,lookingatthemarketoutlook,thetimeforPTAtobottomoutisexpectedtofocusontherelevantdevelopmentsofOPEC+memberstatesandthetimewhenoverseasepidemicsareeffectivelycontrolled.” Liu Siqi said.
The crude oil market experienced another big reversal overnight on the 20th. As central banks and governments around the world took action, they introduced a large number of support measures to alleviate the economic impact of the new coronavirus. At the same time, US President Trump stated that he would intervene in due course. Price war, crude oil futures rebounded from 20-year lows and closed sharply higher, recording the largest single-day percentage increase in history. The price of West Texas Intermediate crude oil (WTI) futures for April delivery on the New York Mercantile Exchange rose $4.85 to close at $25.22 a barrel, an increase of 23.8%. The price of North Sea Brent crude oil futures for May delivery on the ICE European Futures Exchange in London also rose sharply by US$4.02 to US$28.90 per barrel, an increase of 16.16%. Many friends have asked PTA whether they can buy bargains. To be honest, I really don’t recommend this node. Since crude oil prices are still unlikely to continue to rise in the short term, PTA should pay attention to the following three points when buying bottoms:
1. The relationship between Saudi Arabia and Russia shows no signs of easing in the short term. Russia has recently expressed its attitude that in the next two years , able to withstand the current low oil prices, crude oil may remain in a low price range for a long time.
2. The global outbreak of the epidemic has hit the demand for crude oil market. Judging from the epidemic situation in Italy, a cycle of 14 days is considered to be a cycle. It is optimistically estimated that it is unlikely to relax control in the next two months. The demand for crude oil cannot be restored, and the price increase is just a castle in the air. How can PX, ethylene glycol, and PTA be immune?
3. PTA inventory suppresses PTA price increase. At present, high PTA inventories are still beneficial to short sellers. Coupled with falling costs, corporate production capacity remains at a high level, but demand under the impact of the epidemic is pessimistic. <br
