Introduction: During the Spring Festival holiday, cold wave weather led to a reduction in U.S. crude oil production, vaccines in Europe and the United States were actively promoted, and the geopolitical situation was unstable. International oil prices rose sharply. PTA was driven by favorable costs, and PTA futures opened to a good start after the holiday. . The inventory of downstream polyester companies is still at a low level. Polyester and weaving companies are gradually resuming work. Some weaving and yarn mills have started operations during the holidays. With the dual help of supply and demand, PTA will show a stronger trend.
PTA prices increased by 5.08% after the Spring Festival
Figure 2020-2021 PTA spot price comparison:
Source: Longzhong Information
Table 1 Price comparison of PTA related products before and after the Spring Festival:
Source: Longzhong Information
Cold wave weather led to a reduction in U.S. crude oil production, European and American vaccines were actively promoted, and there were uncertainties in the geopolitical situation. International oil prices rose sharply during the holidays, but the expectation that OPEC+ might relax production cuts after April restrained the increase, supporting chemical products. Cost and mentality. Boosted by this, the price of naphtha after the holiday increased by 17.75 US dollars, an increase of 3.23 percentage points, compared with before the holiday. After the holiday, PX continued to destock before the holiday, and an earthquake occurred in Japan during the holiday. PX production was affected, and a unit in Vietnam was shut down. , both are positive for the PX market trend. The price of PX increased by $33.83, an increase of 4.55 percentage points. In terms of demand, polyester inventory is not high after the holiday, and production and sales have been going well since February 17. Some downstream weaving and yarn manufacturers have begun restocking during the holidays, and polyester prices have followed suit. Overall, in terms of cost and demand, Driven by the dual benefits, PTA futures prices have shown an upward trend. As of February 18 after the holiday, the PTA futures price opened at 4,300 yuan/ton, which was 146 yuan/ton higher than the opening price of PTA futures on February 10 before the holiday. The spot price of PTA closed at 4,140 yuan/ton, an increase of 5.08 percentage points from before the holiday. However, considering that PTA equipment has not changed much since the holiday, the load remains high, and new production capacity is still expected to be launched, the upside space on the supply side may be relatively limited.
Cost dominates, and fundamentals continue to oversupply
PX-PTA-polyester installation fluctuation list during the Spring Festival:
Source: Longzhong Information
Cost side Let’s take a look: The cold wave weather in international crude oil prices has led to a reduction in U.S. crude oil production. At the same time, the active advancement of vaccines in Europe and the United States has supported the maintenance of high crude oil prices. During the Spring Festival, Vietnam’s 700,000-ton PX device was shut down for maintenance, and the supply side decreased. However, PX demand remained good despite the high PTA start-up. It is expected that PX may be in a tight balance state from February to March.
From the supply side: Hainan Yisheng’s 2 million tons PTA unit was unexpectedly shut down during the Spring Festival, and the supply side narrowed. However, the other units are operating stably and are expected to be installed in Honggang before the end of the month. The second phase of the petrochemical plant with a capacity of 2.5 million tons is undergoing commissioning, and supply remains high. PTA output is expected to be 4.2 million tons in February. From the demand side, polyester sales are on sale before the Spring Festival, production and sales have increased, and the inventory of polyester products is at a low level. Returning to the market after the holiday, terminal weaving mostly resumes work around the tenth day of the first lunar month, while some yarn companies in Fujian resume work around the third to sixth day of the first lunar month. Therefore, it is expected that terminal demand will still be good, and polyester factories are still optimistic. Overall, polyester production is expected to be 4.05 million tons in February, corresponding to 3.46 million tons of PTA demand. Therefore, PTA continues to be oversupplied.
Forecast of the market outlook:
Overall: the main factor for PTA price fluctuations is still the cost side PX. Crude oil prices continue to be positive, PX costs are moving up, and there is positive support. At the same time, PTA operation is at a high of 86.09%, PX demand is optimistic, and the PX-N price difference is repaired.
In addition, as the market returns to the market after the holiday, downstream and terminals resume work one after another. Although supply and demand continue to be loose, demand continues to improve, and the mentality of the industry has improved. However, the periodic supply and demand mismatch caused by the potential compression of processing fees may further benefit the market, so PTA prices are expected to continue to be strong. </p
