Fabric Products,Fabric Information,Fabric Factories,Fabric Suppliers Fabric News During the production cycle, how do PTA manufacturers survive the reshuffle period?

During the production cycle, how do PTA manufacturers survive the reshuffle period?

In early February this year, major manufacturing companies launched maintenance plans one after another, which was accompanied by a reduction in the supply of contracted goods from manufacturers. The phenomenon…

In early February this year, major manufacturing companies launched maintenance plans one after another, which was accompanied by a reduction in the supply of contracted goods from manufacturers. The phenomenon of PTA manufacturers reducing contracted goods is rare in the development of the industry. What is the reason behind this move? At present, a new round of reshuffle in the PTA industry has just begun. The long-term continuation of new production capacity and low processing fees will lead to a large number of old small devices officially withdrawing from the market. In the future, competition in the PTA industry will become more intense, industry processing costs will further decline, and production capacity iterations are inevitable. How PTA manufacturers survive the reshuffle period has become the focus of market attention.

The market is in turmoil again, and there are constant news of reductions in contracted goods

From 2014 to 2015, PTA manufacturers jointly limited production and guaranteed prices, causing a wave of waves in the polyester market. Nowadays, a similar scene appears again, but this time the manufacturer’s tactic is to reduce contracted goods.

On March 23, 2021, news came out of the market: “Affected by equipment maintenance, some suppliers announced that the April contract will be reduced. The April PTA contract of Yisheng Petrochemical is based on 80% of the annual contract quantity. Supply; Hengli Petrochemical’s April PTA contract supply is based on 70%; a supplier in South China plans to reduce the contract volume in April, and the specific reduction is still under negotiation; a supplier in East China’s April contract volume is supplied at 50%; others The execution of the supplier’s contract is continuing to be tracked.”

At present, one month has passed since the news was released, and the reduction of contracted goods by PTA manufacturers is still in progress. The latest news is that Yisheng Petrochemical will continue to reduce production in May and supply at a 50% discount. What puzzles the market is, compared to market circulation, what proportion of contract goods account for the polyester market? What are contract goods? How does the company allocate and regulate sales? What is the pricing mechanism for contract goods?

During the interview, a reporter from Futures Daily learned that for a long time, the procurement of polyester raw materials such as PX, PTA, and ethylene glycol has been dominated by contract goods and supplemented by spot purchases. The so-called contract goods refer to the PTA spot goods that production plants directly supply to downstream polyester plants under long-term contracts. An annual contract is usually signed at the beginning of the year to determine the supply quantity and related price concessions for the next year.

“Since the production of polyester upstream and downstream is a continuous process, frequent startup or shutdown of the equipment will cause a lot of losses, so both upstream and downstream are willing to stabilize production. Through contract goods, upstream and downstream are locked in throughout the year and the monthly supply quantity, and deliver the goods evenly. In this way, it not only ensures the stable production, sales of goods and return of funds in the upstream, but also stabilizes the production of polyester in the downstream, and there will be no shutdown due to shortage of raw materials.” Galaxy. Li Jie, deputy general manager of Derui’s futures business, said this.

“Generally speaking, in periods of tight supply in the PTA market, polyester factories tend to increase the proportion of contract goods, and the opposite is true in periods of loose PTA supply. For PTA factories, in years of tight supply , the proportion of contract goods signed and sold is relatively high, and even oversold conditions may occur; in years when supply is loose, in addition to contract goods, excess production must be sold through spot, futures and other channels.” Analyst at SDIC Anxin Futures Pang Chunyan introduced.

The reporter further investigated and found that although the contract ratios of various PTA companies are different, manufacturers often arrange at least half of their production and sales volume as contract purchases or contract sales, and the remaining part is used for spot purchases and sales. to make adjustments.

In this regard, the relevant person in charge of Fuhua Industry and Trade also confirmed to reporters that the contract sales ratio of the PTA factory has always been relatively high. For mainstream suppliers with stable production, the contract ratio is generally between 70% and 100%. “Choosing different contract ratios is a strategic direction for suppliers’ annual sales.” The person in charge explained that companies usually evaluate the supply and demand situation in the next year. If the supply is tight, they tend to provide less contract discounts or Reduce the contract ratio; if the supply is loose, you will tend to provide more contract discounts or increase the contract ratio.

For PTA companies, compared with market supply, contract goods account for a larger proportion. Is this because it has a greater price advantage?

According to the reporter’s understanding, the price of contract goods is generally the listing price issued by the manufacturer at the beginning of the month, and the settlement price at the end of the month. Payment is made at the listing price at the beginning of the month, and monthly settlement is made at the settlement price at the end of the month. However, at different times, due to changes in the supply and demand pattern, the pricing mechanism of contract goods also changes.

According to Pang Chunyan, in the early days, the supply gap of domestic PTA was large, and the initiative in pricing contract goods was in the hands of the production companies. The production companies issued the listing price at the beginning of the month and the settlement price at the end of the month, and the polyester factories could only passively accept it. At that time, downstream polyester factories mainly picked up their products from the PTA factory warehouse. After 2014, as the domestic PTA supply turned from insufficient to surplus, the absolute advantage of PTA factories was shaken. In the pricing model of contract goods, the monthly settlement price was no longer independently determined by PTA factories, but CCF, ICIS, and CCFEI were introduced. The average spot price of third-party information agencies will be used as a reference, and a certain price discount will be provided for settlement according to the contract between the two parties. At present, with the maturity of the PTA futures market, the futures price point model has been widely used in the market and has also become a model for contract settlement.

“The monthly settlement prices of major suppliers in the market vary greatly, but the settlement price of contract goods before 2020 is generally higher than the monthly average price of CCF, and the monthly settlement price after 2020 is mostly around CCF The monthly average price fluctuates up and down, and in some months the settlement price is even lower than the average spot price,” Pang Chunyan said.

This wayThe scale of a single unit is more than 2 million tons. The production process of the new unit has been further improved, and the processing cost has dropped by 150-200 yuan/ton compared with the unit put into production in the previous round.

“Compared with the previous industry reshuffle, the biggest difference in this round of reshuffle is reflected in: on the one hand, the devices put into production are mainly large-scale integrated devices, which have great advantages in terms of cost; On the one hand, most of the production launches are the expansion of production capacity of leading companies, including Hengli Petrochemical, Xinfengming, and Yisheng Petrochemical, which are all new rounds of production capacity expansion of existing leading polyester companies, further expanding the influence of the industry. The upstream and downstream integration process of the polyester industry chain has further developed, enhancing its cost advantage.” Zhu Lihang, an analyst at Zheshang Futures, said that the maintenance of low processing fees may be the market’s best explanation for this substantial expansion of production capacity.

Since 2020, four sets of Jialong Petrochemical, Tianjin Petrochemical, Pengwei Petrochemical and Hanbang Petrochemical with a total capacity of 2.44 million tons have entered a long-term shutdown state. As production profits continue to be compressed, small and medium-sized units will be shut down for a long time. will continue to grow.

The reporter learned that after years of development, the trend of integration of enterprises in the polyester industry chain has become increasingly obvious. The three leading enterprises of Hengyi Petrochemical, Rongsheng Petrochemical and Hengli Petrochemical, as well as Tongkun and Shenghong, are not only gradually expanding their PTA production capacity, but also actively putting into production upstream and downstream. The upstream extends to PX and even crude oil, and the downstream polyester It is also actively deploying in filament, staple fiber and other fields. In addition, it can also be seen from the performance change descriptions recently announced by listed companies that Hengli Petrochemical and Rongsheng Petrochemical’s performance increased significantly in 2020, mainly benefiting from the commissioning of large-scale refining and chemical integration projects. Hengyi Petrochemical’s ability to achieve stable performance despite the epidemic also benefited from the development of the Brunei refining and chemical project.

“Integrated development planning can reduce the overall cost of an enterprise and improve its competitiveness in the industry.” Zhu Lihang believes that in the cycle of rapid expansion of production capacity, enterprises need to adapt to the trend of the times and make a complete layout . In addition to putting large units into production or integrating upstream and downstream operations, futures tools must be used more skillfully and flexibly, and through futures hedging, locking in processing fees, etc., we can ensure the safety of the company when international crude oil prices fluctuate violently or are impacted by events such as the epidemic. Make stable profits, smoothly survive the difficult period of industry reshuffle, and wait for the arrival of industry spring.

In Liu Dewei’s view, this round of industry reshuffle can only rely on the demand for chemical fibers transmitted from global downstream textiles to absorb excess PTA after the epidemic has been significantly alleviated. He said: “It will take at least three years to digest China’s relatively excess PTA production capacity. By then, PTA companies that have survived the reshuffle period will also usher in the next round of business cycle.”</p

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