Introduction: Recently, the PTA market has been rising and falling rapidly, and today it hit the limit with lightning speed. As of March 2, the PTA05 contract reached 4574 yuan/ton. Before the end of February, under the influence of both cost and supply and demand, PTA hit the daily limit twice. But in March, in just a few days, PTA’s situation took a turn for the worse, and the speed was so fast that it caught people off guard. This sharp drop in prices can be said to mean success or failure.
The significant increase in PTA prices before the end of February was largely driven by the cost side. Saudi Arabia cut an additional 1 million barrels per day of production from February to March, extreme cold wave weather in the United States led to a decline in U.S. shale oil production, and the continued advancement of the U.S. $1.9 trillion epidemic relief plan provided continued positive support for international oil prices.
Source: Longzhong Information
In March, as the OPEC+ meeting approaches, there is a certain cautious wait-and-see mood in the market. The OPEC+ meeting will hold a new output policy meeting on March 4, and the increase in output may exceed expectations. Saudi Arabia has hinted that it does not rule out the possibility of canceling additional production cuts in March. At the same time, Russia and other countries may propose a small increase in production, which has potential negative guidance. The industry is worried about the reversal of crude oil supply and demand in the future, so the cost-side driver of PTA is showing signs of loosening. The change in cost-side and market mentality may cause the PTA market to shift its focus to the current outstanding supply and demand issues.
Source: Longzhong Information
We have mentioned in previous articles that many PTA devices will face maintenance from March to April. It is expected that The maintenance capacity is as high as 19.65 million tons (including shut down devices) as shown in Table 2. Periodic destocking may occur in a short period. Coupled with the strong promotion of crude oil, the overall mentality of the industry is strong. Now, with the balance between good crude oil prices and bad news, market sentiment is cautious, and the overall social inventory of PTA is at a high of nearly 5 million tons, the contradiction between mid- and long-term supply and demand has once again been amplified. Although market supply and demand eased slightly in March-April due to the expected maintenance of multiple units, in the medium to long term, the contradiction between oversupply and demand in the PTA market has not substantially eased, and the maintenance period for PTA units is mostly half a year. In the next month, with the restart of market outlook devices and the smooth commissioning of new devices, supply is expected to push to a new high again.
Taken together, the current main focus of the industry is the OPEC+ meeting to be held this Thursday (March 4). According to Longzhong Information, the negotiation results of the OPEC+ meeting are the main focus of the PTA market fluctuations. Before the end of the OPEC+ meeting negotiations, the PTA market is still dominated by shock and waiting, but the price fluctuation trend in the future is still cost-driven. </p
