After entering 2021, PTA has gained momentum and has risen rapidly. After returning from the New Year’s Day holiday, it has had a good start driven by the continuous rise of crude oil, and the rise has continued to 2 In March, PTA was affected by the short-term supply and demand mismatch of cost PX, and the spot price rose again. The spot price rose from 3,595 yuan/ton at the end of 2020 to 3,930 yuan/ton on February 1, 2021, an increase of 9.32 percentage points.
Short-term supply of raw materials is narrowing
Source: Longzhong Information
The main raw materials of PTA include PX, acetic acid and others. As an important raw material for PTA, PX accounts for the vast majority of PTA production costs, accounting for approximately 93% of the total cost. Therefore, PX and PTA are highly correlated. Because of this reason, and also because most of PX still relies on imports, most of the layout of PTA manufacturers relies on Jianghai, that is, they are built along rivers and coastal areas. This minimizes the transportation cost of raw materials and the transportation cost of products.
PTA prices rose significantly at the end of January, mainly due to the mismatch between supply and demand of PX on the raw material side. First of all, the 1.6 million-ton unit of CICC Petrochemical was originally planned to restart around January 28, but the restart failed and it will take approximately one month to recover. Secondly, Zhejiang Petrochemical’s 4 million tons PX device failed, and the load was reduced to around 80-90% in the middle of the month and ran for half a month. Finally, the supply side of PTA has increased. On January 21, Fujian Baihong’s 2.5 million tons PTA device was officially put into operation and is expected to be fully loaded in mid-February. In the next quarter, the new PTA production capacity will be approximately 6 million tons. Therefore, from January to February, the spot flow of PX supply side was tense, and the price of PX rose from US$656.5/ton on January 4 to US$728.33/ton on February 1. The monthly increase was 10.94%.
Spring Festival supply maintenance is on the agenda
In fact, in addition to the rising price of PX on the raw material side, the reason for the rise in PTA prices is also boosted by its own supply side. At the end of January, many companies also reported spring maintenance It is expected that Yisheng Ningbo’s 2 million-ton PTA production line will be shut down for maintenance on January 24 and plans to restart on February 8; Jiangyin Hanbang’s 2.2 million-ton PTA production line has not yet been restarted; Fujian Baihong’s 2.5 million-ton PTA production line will be put into operation on January 21. It is expected to be fully operational in mid-February. Major plants such as Hengli Petrochemical, Hainan Yisheng, Reignwood Petrochemical, and Xinfengming are expected to undergo maintenance in March and April. The announcement of the maintenance plan also further boosted the confidence of market investors.
Expectations for the market outlook
The crude oil market is fluctuating at a high level, and the raw material PX is strongly boosted. The PTA processing fee has been compressed, and the current spot circulation in the market is in a tight state. Therefore, short-term PTA prices frequently rise. In addition, in the first half of 2021, PTA’s new production capacity was 11.5 million tons, while PX’s production capacity was only increased by 5.8 million tons. It is expected that there will be a large gap in PX supply, which will provide obvious support to the cost side of PTA. The strong trend may continue in the near future. However, considering that foreign health incidents are still serious, market sentiment is cautious, and downstream polyester and terminal weaving have seasonal production cuts, the gap between supply and demand has widened again, and the recovery of the demand side after the holiday still needs to be waited and seen. Weak mid- to long-term supply and demand may affect PTA’s upside.