Long-term pressure on PTA production continues to exist, and the high inventory conflict also needs to be resolved. There are many PTA maintenance plans in the short term from March to April. The shrinking supply will help reduce inventory, while the high start-up of downstream polyester production will support PTA demand. However, the current terminal is facing the problem of digesting high-priced raw materials. Whether the industrial chain costs can be transmitted smoothly will affect the short-term market rhythm. .
The PTA market has risen rapidly after the Spring Festival. The core driver behind it is still the cost side, coupled with the expectation of equipment maintenance and the resonance of the general commodity environment. After entering March, PX turned into a oscillation, the cost drive slowed down, and the downstream industry chain also faced the problem of digesting high-priced raw materials, and the PTA market began to oscillate and adjust accordingly.
Cost-driven strength weakens
OPEC+ held its 14th ministerial meeting. Except for Kazakhstan and Russia, other member states agreed to extend the production reduction agreement , Saudi Arabia extended its additional production cut plan of 1 million barrels per day until April, and OPEC+ decided to hold a regular monthly meeting to discuss future production. The results of the meeting exceeded market expectations, and international crude oil prices continued to rise sharply. The May contract of Brent oil once exceeded the US$70/barrel mark.
However, the fall in the PX cracking spread offset the benefits of rising crude oil, and PTA production costs did not follow the rise in oil prices. After the outbreak of the epidemic last year, the PX cracking spread has been at a historically low level. After January this year, unexpected equipment maintenance led to a phased improvement in supply and demand, and the PX cracking spread began to be repaired. Especially after the Spring Festival, the price difference between PX and Brent oil jumped sharply from US$250 to US$390, which in turn drove the PTA market to rise rapidly.
From the data point of view, the current price difference between PX and Brent oil fluctuates around US$350, which is equivalent to the level after the cracking price gap plunged in 2019 when Zhejiang Petrochemical went into full production. In view of the PX supply and demand pattern in Asia and the Zhejiang Petrochemical Phase II production plan, it is expected that the price difference between PX and Brent oil will have little room for expansion above US$400. This means that the double-click market on the cost side of PTA may come to an end for the time being, and future cost drivers will rely more on crude oil. .
PTA maintenance helps destocking
PTA production is planned to exceed 10 million tons in 2021, with Fujian Baihong’s 2.5 million tons and Honggang Petrochemical’s 2.4 million tons units It has been successfully put into operation at the end of January and February respectively. The 3.3 million-ton unit of Yisheng New Materials is also planned to be commissioned in mid-to-late April. In the long term, pressure on PTA production will continue to exist, and the high inventory contradiction also needs to be resolved. However, there are many PTA maintenance plans from March to April, including Hengli Petrochemical’s 7.2 million ton unit inspection, Reignwood Petrochemical’s 1.4 million ton inspection for one month, Xinfengming’s 2.2 million ton and Ineos’s 1.25 million ton inspection for two weeks. Yisheng Hainan’s 2 million tons is still being parked. In the short term, the centralized maintenance of major manufacturers will lead to a phased contraction in supply, which will help the PTA market to achieve destocking from March to April. In fact, the effects of the overhaul have begun to show, with inventories falling and the futures-to-cash basis significantly strengthening. As of March 5, PTA enterprise inventory was 5.0 days, a week-on-week decrease of 0.8 days, and the exchange’s warehouse receipt inventory was 391,870, a month-on-month decrease of 3,715. At the same time, the basis of the main 2105 contract also achieved rapid convergence.
On the demand side, due to the response to the local Chinese New Year and the stimulation of rising raw materials, the pace of downstream and terminal resumption of work after the holiday was very fast. The operating rates of polyester and Jiangsu and Zhejiang looms were significantly higher than the same period in previous years, and the demand side also rebounded. Provide certain support to the PTA market. Customs data shows that from January to February, the cumulative value of clothing exports increased by 50% year-on-year. Excluding the impact of last year’s low base, the export value also achieved a year-on-year growth of 15.8%. As vaccination gradually accelerates and global commodity demand returns to normal, the PTA terminal consumer market is expected to usher in restorative growth. However, the rise in raw materials at the end of February stimulated inventory replenishment. As the textile and garment industry resumes work, terminals are faced with the problem of digesting high-priced raw materials, and whether the cost of the industrial chain can be transmitted smoothly will affect the short-term market rhythm.
Pay attention to controlling the market rhythm
OPEC+ extended production cut plan to boost oil prices, but the fall in PX cracking spread offset the benefits of rising crude oil, and PTA production costs have not It has not followed the rise in oil prices, which means that the double-click market where PTA’s cost side relies on oil prices and PX cracking spreads to repair may temporarily come to an end, and the cost drive will slow down in the future. From the perspective of supply and demand, long-term pressure on PTA production continues to exist, and the high inventory contradiction also needs to be resolved. In the short term, there are many PTA maintenance plans from March to April, and the contraction of supply will help reduce inventory, while the high start-up of downstream polyester will provide support for PTA demand. However, currently The terminal faces the problem of digesting high-priced raw materials, and whether the cost of the industrial chain can be transmitted smoothly will affect the short-term market rhythm. </p