On the evening of July 6, 2021, the Biden administration held talks with officials from Saudi Arabia and the United Arab Emirates, hoping to reach an agreement to increase production to prevent oil prices from rising too quickly, and the market was worried that OPEC+ oil-producing countries would exist amid differences. The potential risk of a price war has caused international oil prices to fall the most since the end of May. NYMEX crude oil futures 08 contract fell by US$1.79/barrel to 73.37; ICE Brent oil futures 09 contract fell by US$2.63/barrel to 74.53, a drop of 3.41%, the largest decline since mid-May.
What followed was a sharp fall in the big brother of polyester, PTA. After the domestic futures market opened on July 7, the price of PTA opened low and went down. Closed at the lower limit. That night, international oil prices fell again, with BRENT crude oil futures hitting a low of $72.6/barrel, and PTA futures leading the market decline in the night, with a drop of more than 4%.
In just four days, PTA prices went from leading the rise to Leading the decline is jaw-dropping! In the end what happened?
Dragged down by the appearance of oil prices
But the fundamental reason for PTA’s collapse is still because of it
PTA’s main recent variable is oil prices, but the fundamental reason is that it is at the peak of production capacity, production profits are thin, lacks active directional driving, and is subject to fluctuations in raw materials Caused by greater impact.
PTA production capacity and social inventory reached record highs in the first half of the year, and under supply pressure, PTA processing fees once fell to a nearly five-year low. New highs in production capacity and social inventory have squeezed PTA processing fees. The average monthly PTA processing fee in March was 335 yuan/ton, falling to the lowest level since July 2016.
Under the rapid expansion cycle of PTA, the expansion speed of PTA is much higher than that of downstream polyester. In the first half of the year, the industrial chain processing fees were transferred to downstream polyester. In the first half of the year, The average theoretical profit and loss is: PTA has a loss of 191 yuan/ton, polyester filament POY has a profit of 500 yuan/ton, polyester filament FDY has a profit of 324 yuan/ton, polyester staple fiber 1.4D has a profit of 276 yuan/ton, and polyester bottle flakes have a profit of 154 yuan. /Ton.
The current spot processing difference has been reduced from more than 600 yuan/ton to 500 yuan/ tons nearby. The processing difference in the first half of this year has been below 300 yuan/ton for a long time, while the price of the auxiliary material acetic acid has been rising, eroding industry profits. Based on the calculation that 30-36.5 kilograms of acetic acid is used to produce each ton of PTA, the average monthly cost of acetic acid consumption in the first half of the year is 222 yuan/ton, and the total cost of PTA packaging is about 264 yuan/ton, while the average PTA processing fee in the first half of the year is only 409 yuan/ton. , after excluding acetic acid and PTA packaging costs, the remaining PTA processing fee is about 145 yuan/ton, which cannot cover depreciation, energy consumption, labor and other costs in the production process. Some small PTA factories use about 39 kilograms of acetic acid per ton of PTA produced. The high price of acetic acid puts greater cost pressure on small PTA factories.
Production losses forced large-scale maintenance of the factory. Hanbang Petrochemical’s 2.2 million tons, Many units such as Reignwood Petrochemical’s 1.4 million tons, Liwan Polyester’s 650,000 tons, and Shanghai Petrochemical’s 400,000 tons were forced to shut down during this period. As of now, these units are still in a shutdown state. After the short-term processing gap is compressed, the decline of PTA will gradually narrow and closely follow the trend of raw materials again.
The downstream peak season is expected to be optimistic
But the commissioning of huge new devices is still continuing
The peak season in the second half of the year is approaching, and the industry’s expectations for the peak season are relatively optimistic. However, during the recent rise, some downstream companies have stocked up in advance, and filament stocks have dropped significantly. When the peak season actually arrives, under unanimous optimistic expectations, various downstream links may have been quietly preparing. If there are no unexpected orders, the demand for raw materials in the peak season is likely to be tepid. If orders can explode like last year, it will bring periodic benefits. However, judging from the market performance this year, exports were obviously restricted by high freight rates and tight shipping capacity in the shipping market in the second quarter. The growth rate of textile and clothing exports in May has slowed down significantly compared with April. In terms of domestic demand, after the surge in volume in the second half of last year, home textiles, which performed well, turned significantly sluggish in the second quarter of this year.
In the second half of the year, PTA will first digest the second phase of Zhejiang Petrochemical which was put into operation in June The new supply of 2.5 million tons of PX and 3.5 million tons of PTA from Yisheng New Materials, and another set of 2.5 million tons of PX and 3.5 million tons of PTA will be put into production at the end of the year. This year, due to the large output of PTA at the beginning of the year and the frequent maintenance of old PX equipment, the price difference between PX and naphtha continued to recover, but the maintenance volume of old equipment decreased in the second half of the year. After Zhejiang Petrochemical PX was put into production, the supply of PX increased, and the price may be under pressure. , bringing expectations for PTA’s cost to weaken. Therefore, PTA prices will face downward pressure from PX adjustments and its own supply growth in the second half of the year. The relative price will still remain low, and the absolute price will continue to depend on oil prices.
To sum up, PTA’s bull sentiment has increased recently, but the change in oil prices has dealt a heavy blow to the bulls. After the short-term PTA processing gap was compressed, and without new negative pressure, PTA prices once again kept pace with oil prices. If there is no centralized maintenance in July, the contradiction between supply and demand will be relatively flat, the fundamentals will lack driving force, and fluctuations will dominate. However, the long and short differences will still exist, and the fluctuations are expected to be more violent!
Related reading: In just half a month, the price of polyester filament has been adjusted 6 times! Perhaps there is no need to wait until the peak textile season, and raw material prices may reach another peak!
Polyester filament has risen by more than 500 yuan this month
But the abundant profits have been ruthlessly lost by PTA plunder
At the same time, in the recent stage, driven by international oil prices and upstream polyester raw material prices, the price of polyester yarn has rebounded sharply, and the price is gradually approaching the highest value during the year. From late June to now, in less than half a month, the price of raw materials has been raised about 6 times. On July 5-6, the price of polyester filament increased for two consecutive days this week. The price increase was generally around 100-200 yuan/ton. Nylon FDY, DTY, and POY increased by 400-500 yuan/ton, and spandex generally increased by 1,000- 2,000 yuan/ton.
Although polyester prices have begun to recover, the autonomy of price increases has been given up. Gave it to PTA brother. The increase in PTA has brought about greater cost pressure. Although polyester manufacturers have increased their prices, their previously abundant profits have been ruthlessly robbed by PTA. It is reported that as of last weekend, the profit of FDY150D was 39 yuan/ton; the profit of POY fell slightly, and the profit was concentrated at 200 yuan/ton; the profit of DTY was concentrated at 250 yuan/ton. PTA prices have risen rapidly this week, and although polyester filament has followed suit, profit margins have been further compressed.
Hundreds of weaving companies have joined forces to raise prices
But fabric price increases are still difficult
July is an unusual month, and it is also an uneasy month. The rising prices of PTA are like fires burning the upstream and downstream markets of the entire polyester industry chain. Behind the lively rising prices, there are more helpless sighs from the downstream.
On July 4, Siyang County Taihu Lake Shade Cloth Home Textiles Chamber of Commerce issued a price increase notice: Stimulated by the recent rebound in international oil prices, chemical fiber raw materials have surged. , the costs of downstream weaving enterprises continue to rise, profits have been squeezed repeatedly, and they are already in a state of loss… Finally, it is recommended that all members increase their prices by 0.5-1 yuan/meter depending on the weight of the fabric.