Since the beginning of this year, the prices of crude oil and PX at the cost end of PTA have continued to rise, and the price of the auxiliary material acetic acid has increased significantly, which has greatly squeezed the profits of PTA factories. Under low profits, equipment maintenance has increased, and some equipment has been shut down for a long time. However, the demand-side polyester operating rate continues to remain high. Under the mismatch between supply and demand, PTA has entered the destocking channel since March.
Recently, due to the impact of Typhoon “Fireworks”, the Yangtze River has been closed to navigation, and the mainstream supply of goods in the main port area is in short supply. The PTA basis continues to strengthen, the price center of gravity continues to rise, and the overall profit of the PTA industry chain pick up. What the market is currently concerned about is whether the “good days” of the PTA industry have arrived under the production expansion cycle? The supply and demand pattern of the PTA market has improved. Is it a flash in the pan or is it something that can be expected in the future?
PTA basis strengthened, and industrial profits rebounded across the board
This year due to The absolute level of inventory is too high and processing fees continue to be suppressed. The PTA basis is negative most of the time. However, the reporter observed that the PTA basis has strengthened significantly recently, and the current and futures structure has gradually changed from a high premium in the far month to a discount structure in the far month. As of last Friday, the basis difference between PTA spot and the main futures September contract was +40 yuan/ton.
“Currently, the supply and demand pattern of the PTA industry chain continues to improve, with some spot supplies in short supply and prices rising.” Tianfeng Futures analyst Liu Siqi told the Futures Daily reporter that although PTA is still in production Cycle, the new PTA production capacity in the first half of the year reached 5 million tons, but the outdated PTA production capacity eliminated since this year has exceeded 5.4 million tons. The superimposed equipment has been extensively overhauled, and the maintenance losses on the supply side are relatively high. Against the backdrop of capacity expansion, PTA continues to destock.
Market research data shows that the current social inventory of PTA has dropped by more than 1.4 million tons compared with the peak, and the number of PTA futures warehouse receipts at Zhengzhou Commercial Exchange is also declining.
Recently, due to the closure of the Yangtze River due to Typhoon “Fireworks”, mainstream suppliers have difficulty in arriving goods. Mainstream supply in Zhapu and other places is in short supply. Spot prices have risen sharply, and basis differences have continued to strengthen.
As spot prices continue to strengthen recently, the overall profit of the PTA industry chain has rebounded. During the interview, the reporter learned that last year, new PTA equipment was put into production on a large scale, but demand was affected by the epidemic. The entire PTA industry chain entered overcapacity, and processing fees for both PX and PTA links were at historically low levels.
“At the beginning of this year, with the launch of PTA production capacity, the supply and demand pattern of PX changed. The profits of the industrial chain were transferred from PTA to PX, and PTA’s own profits were pushed to a lower position. “Zheshang Futures analyst Zhu Lihang said that before this round of surge, PTA production profits were 400-600 yuan/ton. Recently, due to the continuous improvement of the supply and demand pattern, PTA production profits have recovered. The current PTA spot processing fee has risen to around 800 yuan/ton.
In addition to the return of PTA and PX profits, the profits of the downstream polyester end of PTA have also rebounded to a certain extent. According to Liu Siqi, downstream demand this year has shown a mismatch in the off-peak and peak seasons. Before the Spring Festival, the market had good demand expectations for this year. A large number of orders were placed, and weaving factories increased speculative stocking. Polyester maintained high profits and low inventory. After March, the terminal’s “peak season is not prosperous”, and the stocking of raw materials has declined. Although the polyester end maintains a certain profit, production and sales are poor, and it is difficult to convert profits into cash flow. However, in the second half of the year, when the inventory of downstream raw materials was at a low level in the early stage, purchases increased and the cash flow of polyester companies improved. Overall, the profits of the current PTA industry chain have rebounded across the board.
In the opinion of industry insiders, the recovery in profits of the PTA industry chain is in line with fundamentals, but there is a certain gap between the accumulated inventory pattern at the beginning of the year and the expectations.
“The main reason for the overall recovery in industrial profits is that the actual situation is much better than expected.” Zhu Lihang said that in the first half of the year, PTA continued to destock, and warehouse receipts continued to be written off. In the second quarter, Since then, PTA has canceled 280,000 warehouse receipts, equivalent to nearly 1.4 million tons. In addition, the profits and inventories of downstream polyester have been at relatively healthy levels this year, and the off-season start-up has not weakened. The support for the raw material end is significantly better than expected, and the profit focus of the PTA industry continues to shift upward.
The shortage of supply is an important factor at present
In the interview, the reporter It is understood that the shortage of PTA supply is a key factor affecting the current market trend. From the perspective of the entire market, the PTA production capacity in Zhejiang is 18.35 million tons, while the polyester production capacity in the region is 29 million tons. Therefore, there is a large gap between supply and demand in Zhejiang.
“Due to the maintenance of Reignwood and other equipment in the Zhejiang region, destocking has continued since March, and there are very few goods left in the PTA delivery warehouse in Zhejiang. Recently affected by the weather, unloading at the port has slowed down , Polyester factories have urgent replenishment needs.” Industry insiders said.
In this regard, Liu Siqi also said that the number of PTA warehouse receipts in Zhejiang has dropped rapidly from the peak of nearly 270,000 since March. By the end of May, the warehouse receipts in Zhejiang have basically been written off, and downstream factories Reliance on spot goods in reservoir areas at major ports such as Zhapu has increased. Affected by Typhoon “Fireworks” in East China, the flow of some mainstream goods from Zhejiang into the reservoir area has slowed down, and the shortage of spot goods in Zhapu and other places has intensified.
The reporter learned that due to the impact of the typhoon, the price of PTA has risen sharply in recent days, with an increase of more than 400 yuan/ton in just a few days. In previous years, typhoons would also cause shipping closures to main ports in East China. Usually when the overall inventory of PTA is not high, shipping closures caused by typhoons can easily trigger market prices.
“In 2018-2019, PTA was also closed due to typhoons, and prices rose sharply; in 2020, due to high PTA inventories and weakening demand caused by the epidemic, typhoons did not affect It has a significant impact on the PTA market.” Liu Siqi said.� The impact of this year’s typhoon closure is mainly reflected in the difference between reality and expectations. The PTA market was originally in a situation of oversupply, but equipment maintenance caused PTA to continue to be destocked, and the typhoon and shipping closures intensified the tight situation, which in turn triggered the market.
In the opinion of industry insiders, the short-term partial shortage situation will need to wait until the typhoon is over to alleviate. According to weather forecasts, the typhoon may last until July 28. With the end of the typhoon and the port opening to navigation, the partially tight supply of PTA may be alleviated.
“In terms of PTA fundamentals, PTA may still maintain a tight supply situation in the third quarter.” Liu Siqi said that from the current supply and demand pattern, the supply side 7- The amount of equipment maintenance in August remained at a relatively high level, and no new domestic equipment was put into production in the second half of the year; the demand-side terminal order index rebounded slightly, new polyester equipment was put into production one after another, and the polyester operating rate remained above 93%. PTA may continue to decline in the third quarter. Library. In her opinion, the current fundamentals of the industrial chain are improving, and in the short term, a strong market pattern for PTA can be expected.
“At present, the overall supply and demand of PTA in the third quarter is benign.” Industry insiders said that before demand weakens, the contradiction between PTA supply and demand will not be particularly large, and profits will have a certain resilience. . In the past four quarters, there were still certain peak season expectations, but the core lies in whether the high operating rate of polyester can be maintained in the third and fourth quarters. This is the key to determining whether PTA supply and demand can maintain a tight balance in the future. Otherwise, there will be certain accumulation expectations in the fourth quarter. The relatively high processing fee of PTA is somewhat suppressed.
In Zhu Lihang’s view, although the fundamentals of the current industrial chain have improved, it is still too early to judge that the “good days” of the PTA industry have arrived.
“Inventories continued to be reduced in the first half of this year. On the one hand, the downstream polyester operating rate was significantly higher than the normal period in previous years. On the other hand, due to the substantial increase in export volume, the Supply pressure. In fact, the pressure on PTA production capacity is still high, and there are still several large-scale devices for PX and PTA to be put into production in the future, and the pressure on the supply side will not decrease.” Zhu Lihang said that in the short term, if export volume cannot be maintained, PTA may be During the accumulation cycle, the recovery in profits will also slow down the elimination of small and old devices to a certain extent. In the context of still high pressure on production capacity, the overall rebound in profits of the industrial chain may be difficult to maintain. </p
