As for the market outlook, we believe that the high point of PTA years ago has basically appeared, and this rise has come to an end. In the later period, as the cost side corrects and the market gradually begins to pay attention to the evolution of the contradiction between supply and demand, the PTA market may gradually begin to correct. The correction space is determined by the strength of the crude oil correction, and is expected to be relatively limited; the time may last until after the Spring Festival.
Supply and Demand
First, let’s take a look at the evolution of supply and demand issues. On the supply side, the new installations are synchronized with the restart of the equipment, and there are relatively few maintenance plans currently available. Therefore, the supply of PTA may reach a record high of 152,000 tons/day; on the demand side, as the Spring Festival gradually approaches, Terminal demand may gradually begin to slump, leading to a decline in polyester load. Although polyester capacity expansion and Jiangsu and Zhejiang’s encouragement to celebrate the Chinese New Year on-site may cause polyester production to be higher than in previous years, the decline is still relatively obvious. It is expected that daily polyester production may be dropped to around 140,100 tons. The contradiction between supply and demand will gradually become more prominent, and the accumulated inventory during the Spring Festival will become more obvious, with a single-day surplus reaching 25,000-28,000 tons/day. If the cost side loses momentum, the contradiction between supply and demand may gradually become the focus of the market, thus inhibiting the upward trend of the market.
2
Cost-Crude Oil
In terms of cost, the main driver in the early stage mainly came from crude oil, and the repair of naphtha cracking price difference and PX processing difference will also help the rebound of PTA costs at a certain cost. This logic will exist in the medium and long term. Before and after the Spring Festival, prices may gradually adjust, thus affecting the cost market.
First of all, the U.S. economic stimulus plan will gradually repair the recovery of the demand side. The improvement in supply and demand makes us still optimistic about the upward trend of crude oil in the medium and long term, and the target may be adjusted to around $65; while the short-term Fed fiscal policy This may cause the U.S. dollar to gradually begin to strengthen and commodity prices to be suppressed. We base our short-term correction expectations on the $48-50 range.
3
Cost-Naphtha
On the other hand, the recent supply and demand of naphtha has eased slightly compared with the fourth quarter, while crude oil expectations are still slightly firm, so the naphtha cracking spread may fall slightly to around US$90/ton; while PX processing On the downside, PX supply has risen sharply due to multiple equipment installations, and the short-term supply and demand balance is generally lower than expected. There are still two PTA units put into production in the first quarter, so we are still optimistic about the PX processing gap trend before Zhejiang Petrochemical goes into production, and naphtha The fall in the cracking spread will give some room for PX processing difference, so we make corresponding expectations at US$190-200.
4
Cost-Exchange Rate
In addition, we need to consider one more thing, which is the issue of exchange rate. The appreciation of the RMB exchange rate in the medium and long term is still a general trend, but if the US dollar gradually bottoms out and strengthens in the short term, it may affect the pace of RMB appreciation. We fine-tune the expected exchange rate to around 6.5-6.55.
Cost – PTA processing fee
The last is the change in PTA processing fee. As we mentioned before, the contradiction between supply and demand of PTA is more prominent around the Spring Festival, so we believe that the processing fee of PTA may be compressed in the range of 350-400 yuan/ton, and will continue to remain low until the contradiction between supply and demand is gradually eased.
So, whether it is expected from the cost trend or the demand return to ease in the second quarter From the perspective of the contradiction between supply and demand, the mid- to long-term PTA market is still optimistic; during the Spring Festival holiday, with the correction of crude oil and the evolution of the contradiction between supply and demand, the market may experience a slight correction. Based on the calculation of the various elements expected to constitute the PTA price, there is room for correction. Roughly around 3,550 yuan/ton.
The risks affecting the callback during the period mainly come from the following aspects:
1. Affected by low inventory and workers celebrating the New Year in situ, the polyester load exceeded expectations, thus easing the contradiction between supply and demand and making the market’s intention for a correction unclear. But we also need to see that even if polyester remains high, the seasonal decline in terminal demand will still cause high post-holiday polyester inventories, which will affect the node and intensity of demand return in the second quarter. Therefore, whether terminal demand can be as strong as expected? ��� is our focus, and the indicators are textile and weaving orders, inventory and operating rate.
2. There is a certain degree of uncertainty on the cost side. At present, the market’s expectations for costs are still strong, and many people choose to ignore the contradiction between supply and demand under the strong expectations of costs. Once the correction of crude oil exceeds expectations, the impact of the contradiction between supply and demand may be magnified, thereby reducing the correction space of PTA.
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