The PTA market has been rising recently, and the core logic is cost-driven. Fuhaichuang and Hanbang parking maintenance are just the icing on the cake. Against the background of overcapacity, PTA fundamentals are still under pressure as a whole, cost-driven will dominate the future market trend, and maintenance activities will only affect the market rhythm.
The strongest driving force for PTA’s rise comes from costs
There are two logics for the recent strength of the PTA market: one is driven by the cost side, which is also the most important upward thrust; Second, major PTA manufacturers are undergoing centralized maintenance, and supply has been significantly reduced in stages. The market has shifted from expectations of inventory accumulation to reality of destocking. How will the PTA market perform in the future? Can the core logic be sustained? Our point of view is: cost-driven is the core logic, and PTA factory maintenance is the icing on the cake. How far the market can go next depends on the sustainability of the above two aspects.
Brent crude oil futures oscillated upward after bottoming out on November 2, 2020, while CFR China PX rose steadily after bottoming out in the same period, and the price trends of the two were in lockstep. However, the PTA market lagged slightly, and the futures index began to rebound after hitting a record low of 3,246 yuan/ton on November 9 last year.
From the data point of view, Brent oil has the largest increase, followed by CFR China PX, and PTA spot futures has the lowest increase. The reason is that the appreciation of the RMB exchange rate has caused the increase in PTA production costs to be lower than that of PX, while the increase in the spot price of PTA futures is much lower than the increase in costs. This shows that PTA factories have failed to transfer costs to downstream, and industry processing fees have been significantly reduced in the past two weeks.
PTA still plans to put into operation more than 10 million tons of equipment in 2021, but the recovery in demand is obviously difficult to digest the huge increase in supply. The market is already overcapacity. In addition, PTA has nearly 4 million tons of inventory. It is difficult to have strong support at the market supply and demand level. In this environment, the PTA industry can only clear production capacity through low profits. Industry processing fees are expected to continue to be compressed at a low level. And benefiting from the expected global economic recovery, the center of gravity of oil prices will most likely rise gradually. Therefore, the cost end will become PTA The core driving force of the market.
Industry equipment maintenance affects the market
The current PTA industry maintenance statistics are as follows: Jialong Petrochemical, Tianjin Petrochemical, Pengwei Petrochemical, Hanbang Petrochemical 1#, The Yangzi Petrochemical unit is in long-term parking and will most likely be eliminated by the market in the future; Fuhaichuang’s 4.5 million ton unit was shut down on December 23 last year and is scheduled for maintenance for 25 days; Hanbang Petrochemical’s No. 2 2.2 million ton unit was shut down on January 6 Maintenance and restart time are to be determined; Yisheng Hainan’s 2 million ton unit was originally scheduled for maintenance in January 2021, but is now scheduled to be postponed to March.
With the shutdown of Fuhaichuang and Hanbang for maintenance, the PTA industry load dropped by 10 percentage points compared with the beginning of December last year, and the PTA market supply shrank significantly month-on-month. At present, Fuhai Chuang is scheduled to restart around January 18. If Hanbang Petrochemical resumes production after this time, the PTA industry will maintain a low load during this period, and the downstream industry will also replenish its inventory driven by the rise in raw materials. , even triggering the release of some speculative demand, and the PTA market is expected to usher in a “honeymoon period” of destocking. However, if Hanbang Petrochemical restarts early, the benefits at the supply and demand level will be compromised. Therefore, whether the positive supply and demand side can continue in the future mainly depends on the maintenance situation of PTA, and at the same time, attention will be paid to the progress of new equipment being put into production.
Pay attention to control the market rhythm
The recent strength of the PTA market is supported by two aspects. Cost-driven is the core thrust, while major PTA manufacturers are concentrated on maintenance More like icing on the cake. How the market will interpret next, we believe the key lies in the sustainability of the above two aspects. Among them, the maintenance situation of the PTA device is relatively clear. Before the restart of the Fuhaichuang device, the industry is expected to maintain low-load operation. The market will still be in a destocking cycle, and the phased benefits at the supply and demand level are expected to continue. As the core driver of the cost side, the center of gravity of Brent crude oil is likely to oscillate upward in the medium term. However, the current COVID-19 epidemic situation is still severe, the macro environment faces many uncertainties, market sentiment fluctuates greatly, and the market rhythm remains complex and changeable. Therefore, in the short term, PTA will still respond with a bullish approach, but in terms of rhythm control, it is necessary to closely monitor oil prices and device restarts. </p
