From early November 2020 to the end of February 2021, PTA futures started a wave of unilateral upward trend. During this round of PTA price increases, although there have been periodic shortages in supply and demand, the most important driving force for PTA price increases is still the increase in costs. In recent trading days, international crude oil prices have fallen sharply, and PTA futures have been implicated and have continued to fall. Considering that the supply and demand side cannot replace the cost side to provide upward momentum for PTA, the probability of PTA peaking is gradually increasing when there is a risk of cost collapse.
Tight supply and demand phased balance
Since the beginning of March, many domestic PTA production equipment have been overhauled. Among them, Reignwood Petrochemical’s 1.4 million-ton unit was overhauled on March 6, with a one-month maintenance period; Hengli Petrochemical’s 2.5-million-ton unit was overhauled on March 6 and has resumed production in the near future; Yadong Petrochemical, Xinjiang Zhongtai and Zhuhai BP All devices were overhauled in mid-to-early March. Affected by this, the operating load of domestic PTA manufacturers has dropped to the lowest point since the outbreak last year. Relevant data shows that as of March 18, the domestic PTA operating load was 80.25%, down 10.25 percentage points from the high point in early February.
Looking at the market outlook, although the No. 4 units of Yadong Petrochemical and Hengli Petrochemical have resumed production, Hengli Petrochemical’s Units 1 and 5 will have maintenance plans in the near future, involving a production capacity of 2.7 million tons. , Jiaxing Petrochemical, Yisheng Ningbo and Xinfengming also have maintenance plans in April. Under this circumstance, domestic PTA supply will be tight in the next month.
Looking at the demand side, due to the delay in the return of workers to factories, the terminal textile industry has experienced labor shortages. Recently, as workers have gradually returned to work, companies have become more motivated to produce in order to meet orders. At the same time, the recent operating load of polyester companies has been at a high level of more than 90%, which will help speed up PTA destocking amid the ebb and flow of PTA and polyester supply. However, it should be noted that due to rising raw material prices, terminal textiles are more cautious about receiving new orders. Not only that, the current polyester filament inventory has increased significantly, and polyester companies are also facing greater destocking pressure in the later period. The demand side has doubts about the sustainability of PTA’s support.
There is a risk of cost collapse
International crude oil prices began to fall in early March, and even fell sharply on March 18, once falling by 9% during the session. %. From a fundamental perspective, there are no obvious negative factors driving oil prices down. In fact, OPEC+ slowed down its production resumption process at the beginning of the month, and Saudi Arabia insisted on voluntary production cuts. As the global epidemic is brought under control, crude oil demand is expected to recover. Therefore, the decline in international crude oil prices last week was largely due to the realization of bullish factors and profit-taking by bulls.
Overall, although OPEC+ has significantly reduced production, this is to offset the drop in demand caused by the epidemic, and global crude oil supply and demand have not become tight. However, international crude oil prices have recently reached a new high since the end of 2018, exceeding the level since the outbreak of the epidemic last year. Not only that, international crude oil prices have made most oil-producing countries very profitable. Even the higher-cost U.S. shale oil has a profit of nearly US$20 per barrel. This increases the probability that the already fragile production reduction alliance will be disbanded. Oil prices remain The possibility of a sharp correction.
To sum up, purely from the perspective of supply and demand, the PTA device is under maintenance, the downstream polyester maintains high load, and the overall market supply is tight. Not only that, PTA processing fees are at an extremely low level, and there is a demand for upward price repair, so PTA is expected to rebound from an oversold price in the near future. It is important to note that this round of PTA rise is driven by the cost side. Currently, international crude oil prices are overvalued and have shown signs of loosening recently. Once oil prices fall sharply, the positives on the supply and demand side will be difficult to offset the negative risks caused by cost collapse. Then the risk of going long PTA will increase. In this case, it is recommended to rely on the 60-day moving average for short positions and long positions, and take profits when the processing fee returns to the 400 yuan/ton line. </p
