PTA has had a “good start” in 2021, with futures prices oscillating and rising. The main futures contract rose from 3,820 yuan/ton at the end of last year to 4,068 yuan/ton on January 7, an increase of 6.49%. The core logic of this wave of rising market prices is mainly driven by the cost side. The continuously compressed PTA processing gap confirms this logic from the side. The PTA spot processing gap has been compressed to around 410 yuan/ton; the continued tight spot liquidity and Fuhua Industry and Trade, etc. The maintenance actions of major manufacturers also boosted the development of the market. The author believes that the cost-driven logic is still valid, but with the release of new production capacity and the seasonal reduction of the demand side approaching the Spring Festival, there may be a risk of a phased decline in the PTA market.
The rising cost side has boosted the rise of PTA
The recent cost side has been strong. According to the price data on January 7, the various varieties of the PTA industry chain are lower than in early November 2020. The point increases are:
As a direct raw material for PTA, PX closely follows the pace of crude oil. As of January 7, the price of PX was reported at US$694/ton, which is the same as that of early November 2020. It has increased by 36% compared to the low point, and the recent performance of PX fundamentals can also support the rising market. The supply side has benefited from the maintenance of equipment such as CICC and Fuhai Chuang, and the output has shrunk. The demand side PTA factory load is at 80% – High and narrow range fluctuations between 90%, and in December 2020, PTA monthly output hit a record high of 4.62 million tons, driving the demand for PX to pick up. In terms of inventory, the total destocking of PX in November and December 2020 was about 350,000 tons. As a liquid chemical, PX is particularly sensitive to changes in inventory, so the strong price response seems reasonable. In terms of crude oil, Saudi Arabia unexpectedly announced a voluntary production cut of 1 million barrels per day at the OPEC+ meeting. The intensity of this production reduction greatly offset the negative impact of increased production in Russia and Kazakhstan. In addition, data released by the EIA showed that U.S. crude oil inventories dropped significantly by 8 million barrels, the largest drop since August, pushing international crude oil prices higher. WTI futures prices exceeded the $50/barrel mark for the first time since February 24, 2020.
Looking forward, the cost-driven logic has not changed. The benefits brought by the OPEC+ meeting are sustainable. The advancement of global vaccines and the low US dollar will provide certain support for international oil prices. . PX fundamentals are also expected to be optimistic: on the demand side, the commissioning of Fujian Baihong’s 2.5 million tons PTA device will increase the demand for PX materials. On the supply side, Zhejiang Petrochemical’s second phase of 2.5 million tons of new production capacity is planned to be released in April. On the short-term PX supply side The pressure is not great. PX imports may shrink as the Spring Festival approaches, and the destocking trend is sustainable in the short term.
Since November 2020, the PTA market has always been in a contradictory situation where accumulated inventory and tight spot liquidity coexist. The reason is mainly due to the exchange’s expansion of delivery warehouses and storage capacity, and the continuous rise in prices has created huge arbitrage space between spot and futures. A large number of PTAs have been registered as warehouse receipts and entered the delivery warehouse. This is reflected in the data. As of On January 7, 2021, PTA warehouse receipts reached 346,748, equivalent to approximately 1.73 million tons of PTA, setting a new high for the year.
Seasonal load reduction on the demand side
In terms of new production capacity, it was originally planned to be launched in 2020 The start-up of Fujian Baihong’s 2.5 million-ton unit has been postponed to January or February 2021. In addition, the 4.5-million-ton unit of Fuhua Industry and Trade, which began maintenance at the end of last year, will restart near January 20. At that time, the supply-side output load and output Improvement, supply maintains loose expectations.
In terms of demand, the current indicators of the polyester segment are relatively benign. Except for FDY, the inventory and cash flow of other polyester filament varieties have returned to normal levels in previous years. POY The inventory index is at 6.6 days. The polyester staple fiber inventory index has continued to run negative since October 2020, and the cash flow of short fiber factories is currently about 500 yuan/ton. Taking short fiber companies in South China as an example, 500 yuan/ton tons of cash flow at normal levels. As the Spring Festival approaches, the market is generally concerned about polyester factory maintenance and the holiday situation of workers in the terminal textile and garment industry. Although some short fiber companies in South China have stated that they do not plan to take holidays and workers will rush to produce orders, judging from the currently announced polyester factory maintenance plan, Most filament and short fiber companies in Jiangsu and Zhejiang regions will start planned maintenance in mid-to-late January. Therefore, the seasonal load reduction at the polyester end is relatively clear. If Baihong’s 2.5 million tons of new equipment is started as scheduled, the PTA accumulation pressure will further increase.
Taken together, this wave of cost-driven market logic has not yet ended, and the subsequent launch of new production capacity and seasonal reductions in demand may intensify supply and demand. Contradictions, be wary of the risk of periodic price declines. In terms of processing fees, PTA factories can focus on the multi-PX and short-PTA strategy. In the medium and long term, the rising cost focus and macro repair logic are still valid. </p
