Abstract
In 2020, PTA was affected by cost collapse and weakening supply and demand. The futures price fell to a record low and the center moved downward. Looking forward to 2021, the views are as follows:
PX prices are expected to recover. In 2021, the international oil price center is expected to move up further; the PX industry will add 5.8 million tons/year of new production capacity, and the new downstream PTA production capacity can absorb the new PX production capacity. Under the periodic mismatch of supply and demand, the PX-NAP price difference is expected to be repaired. With the recovery of crude oil prices and the improvement of PX supply and demand, PX prices are expected to recover.
PTA supply will continue to increase. In 2021, it is expected that the PTA industry will add 11.5 million tons/year of new production capacity. The production time will be concentrated in the first half of next year, and the industry’s production capacity growth rate will reach 20%. Although the operating rate of the PTA industry may decline due to the expected reduction in processing fees, the pressure on PTA supply is still great.
The growth rate of polyester production is not as fast as the growth rate of PTA supply. In 2021, the polyester industry plans to add 6.355 million tons/year of production capacity, and the production capacity growth rate will reach 10.2%. Next year, under the “dual cycle” development pattern, the economy will gradually recover, the demand in the textile and apparel industry will also follow the recovery, and the polyester operating rate will increase month-on-month. In addition, the current expansion of polyester production capacity is mainly based on the integrated configuration of upstream and downstream industry leaders. The company’s overall risk resistance is strong and it has a higher tolerance for high inventory and low profits. It is expected that the launch of polyester production capacity next year will be relatively smooth. Polyester production will continue to increase.
PTA social inventory will continue to accumulate. As of December 4, PTA social inventory rose to 4.156 million tons, an increase of 2.822 million tons from the beginning of the year. According to the PTA and polyester production capacity investment plan, the growth rate of PTA supply in 2021 will far exceed the demand growth rate, and the oversupply contradiction will further intensify. PTA social inventory will continue to accumulate during the year, and the accumulated inventory is huge.
PX-PTA-polyester industry chain profits will be redistributed. In 2021, in the PX-PTA-polyester industry chain, the contradiction between supply and demand of PTA will be the most prominent, followed by PX and polyester. Industrial chain profits will also be redistributed. The PTA industry will enter an era of low processing fees, and the transferred processing fees will flow into the PX and polyester markets, which have relatively good supply and demand. Referring to the previous PTA industry cycle, it is expected that PTA processing fees will fall back to the same period in 2015 and 2016, with processing fees operating in the range of 300 to 500 yuan/ton most of the time.
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Part 1 PTA market review
2020 PTA futures price The center of gravity moved downward from a high level, bottomed out several times, and then maintained a low operating state. The operating range during the year was 3100~5200 yuan/ton. In the first quarter, affected by the epidemic, PTA costs collapsed, supply and demand continued to weaken, and the focus of futures prices continued to shift downward. In the second quarter, crude oil rebounded from low levels, speculative funds bought the bottom, terminal demand slowly improved, and PTA bottomed out. In the third quarter, PTA social inventories continued to accumulate, crude oil fluctuated and consolidated, and futures prices were in a dilemma and remained volatile. In the fourth quarter, futures warehouse receipts were cancelled, the spot market had sufficient liquidity, and the overseas epidemic broke out again. PTA followed the weakness of crude oil.
Part 2 Macroeconomic Environment
1. The economy continues to recover
The economy continues to recover. In the first three quarters of 2020, my country’s GDP was 72,278.6 billion yuan. Calculated at constant prices, it increased by 0.7% over the same period last year. In the first half of the year, it dropped by 1.6%. The cumulative growth rate turned from negative to positive for the first time this year. Among them, the added value of the primary industry was 4,812.3 billion yuan, an increase of 2.3%; the added value of the secondary industry was 27,426.7 billion yuan, an increase of 0.9%; and the added value of the tertiary industry was 40,039.7 billion yuan, an increase of 0.4%. The cumulative growth rates of the three industries have all achieved positive growth, and the long-term positive trend of economic development remains unchanged.
The pig cycle has a huge impact, and CPI has fallen from its high level. From the perspective of the pig cycle, in each pig cycle in history, the decline in pork price growth usually lasted for about two years. The price peak of this round of pig cycle is at the beginning of 2020, so the overall pork price is expected to remain in a downward channel in 2021, which will inhibit the obvious recovery of CPI. The situation of rent pressure and stagflation has begun to improve in the second half of 2020, and is expected to continue to improve next year. In addition, if we look at the neutral expectation that international oil prices will remain around $50, next year’s energy price will mainly drive CPI in the first half of the year, and the magnitude will be limited. We predict that CPI may rebound slightly in the first half of next year and begin to return to stability in the middle of the year, while core CPI may recover to some extent. Compared with the pig cycle, the main risk factor is still the stability of international oil prices.
The bottom of PPI has been established and the rebound trend is expected to be maintained. Looking forward to 2021, the pace of domestic economic recovery remains unchanged. During the boom period of active inventory addition and investment clock, PPI will be further repaired, superimposed on a low base. It is a neutral assumption that crude oil and other commodity prices are not affected by non-economic factors. It is expected that the PPI growth rate will continue to rise in the first half of next year until around the middle of the year, then fall slightly in the third quarter, and then rebound in the fourth quarter. After turning positive in the second quarter, it will generally remain near high levels in the second half of the year. The continued improvement in producer prices and the rebound in output will be conducive to the recovery of corporate profits. In addition, it is necessary to pay attention to the drag on the black industrial chain during the release of risks such as real estate investment, and the internal differentiation of PPI may intensify.
2. Monetary policy will no longer be loose
In 2020, monetary policy will first be loosened and then tightened. Looking forward to 2021, monetary policy will no longer be loose and there are concerns about credit contraction.When the volatility is below 20%, focus on the opportunity to buy the straddle strategy to go long volatility, and when the volatility rises back above 40%, focus on the opportunity to sell the wide straddle option strategy to short the volatility.
Part 10 Summary and Operational Suggestions
In 2020, PTA futures prices fell due to cost collapse and weakening supply and demand. A new historical low was reached, and the center moved downward. Looking forward to 2021, the views are as follows:
Cost side: PX prices are expected to recover. In 2021, the international oil price center is expected to move up further; the PX industry will add 5.8 million tons/year of new production capacity, and the new downstream PTA production capacity can absorb the new PX production capacity. Under the periodic mismatch of supply and demand, the PX-NAP price difference is expected to be repaired. With the recovery of crude oil prices and the improvement of PX supply and demand, PX prices are expected to recover.
Supply side: PTA supply will continue to increase. In 2021, it is expected that the PTA industry will add 11.5 million tons/year of new production capacity. The production time will be concentrated in the first half of next year, and the industry’s production capacity growth rate will reach 20%. Although the operating rate of the PTA industry may decline due to the expected reduction in processing fees, the pressure on PTA supply is still great.
Demand side: The growth rate of polyester production is not as fast as the growth rate of PTA supply. In 2021, the polyester industry plans to add 6.355 million tons/year of production capacity, and the production capacity growth rate will reach 10.2%. Next year, under the “dual cycle” development pattern, the economy will gradually recover, the demand in the textile and apparel industry will also follow the recovery, and the polyester operating rate will increase month-on-month. In addition, the current expansion of polyester production capacity is mainly based on the integrated configuration of upstream and downstream industry leaders. The company’s overall risk resistance is strong and it has a higher tolerance for high inventory and low profits. It is expected that the launch of polyester production capacity next year will be relatively smooth. Polyester production will continue to increase.
Inventory side: PTA social inventory will continue to accumulate. As of December 4, PTA social inventory rose to 4.156 million tons, an increase of 2.822 million tons from the beginning of the year. According to the PTA and polyester production capacity investment plan, the growth rate of PTA supply in 2021 will far exceed the demand growth rate, and the oversupply contradiction will further intensify. PTA social inventory will continue to accumulate during the year, and the accumulated inventory is huge.
Profit: PX-PTA-polyester industry chain profits will be redistributed. In 2021, in the PX-PTA-polyester industry chain, the contradiction between supply and demand of PTA will be the most prominent, followed by PX and polyester. Industrial chain profits will also be redistributed. The PTA industry will enter an era of low processing fees, and the transferred processing fees will flow into the PX and polyester markets, which have relatively good supply and demand. Referring to the previous PTA industry cycle, it is expected that PTA processing fees will fall back to the same period in 2015 and 2016, with processing fees operating in the range of 300 to 500 yuan/ton most of the time.
To sum up, in 2021, the PTA oversupply situation will further intensify, and the processing fees of the PTA industry will also be compressed. With low processing fees, the cost side’s guidance on the absolute price of PTA will be further strengthened. According to the estimated operating range of Brent crude oil of 43 to 65 US dollars per barrel, the PTA operating price will be between 3,400 and 4,400 yuan per ton.
PTA selling hedging suggestions: For PTA holders, options dynamic hedging should be used to sell spot goods. Although the contradiction between excess supply and demand of PTA has increased, the absolute price is guided by the cost-end crude oil, and the center may fluctuate upward. PTA holders can sell out-of-the-money call options for hedging and shipment. If the futures price rises above the PTA execution price, they can choose to exercise the option and obtain a short futures position or sell spot to complete hedging and shipment. goods. If the price fails to rise above the execution price, you can hold it until maturity and receive premium income. In addition, PTA factories can consider a short PTA processing fee strategy, that is, short PTA and long PX.
PTA buying and hedging suggestions: For downstream short fiber companies, they can focus on short fiber and PTA arbitrage strategies, build virtual factories on the market, and lock in short fiber processing fees. During the seasonal peak season from March to April, consider short staple fiber and long PTA combinations and hold until July, the off-season. For downstream filament companies, they can consider selling PTA out-of-the-money put options. If the futures price drops below the PTA execution price, they can choose to exercise the option to obtain a long futures position or buy spot to complete hedging and purchasing. If the price fails to fall below the exercise price, you can hold it until expiration and receive premium income.
Speculative suggestions: The driving force for the rise of PTA in 2021 is crude oil and centralized maintenance of equipment, while the driving force for the decline of PTA is the worsening supply and demand contradiction. When the PTA processing fee is close to 300 yuan/ton, and if the oil price has no further downward momentum, you can consider holding long PTA orders in stages; when the crude oil price is at a high level and there is a downward trend, consider entering short PTA orders in stages.
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