The recent increase in PTA prices is mainly due to the increase in cost, and the price center is gradually moving higher. There is a trade-off relationship between naphtha cracking price difference and PX processing difference, and the actual changes are relatively limited. Therefore, the main driving force on the cost side comes from crude oil.
Judging from the trend of PTA processing fees, it further confirms the view of cost boosting.
The overnight crude oil OPEC meeting was frequently positive, stimulating crude oil prices to hit new highs. The production reduction agreement was originally expected to increase production by 500,000 barrels per day, to maintain production unchanged, and finally to reduce production on a large scale, and the positive expectations for the supply side gradually expanded. Moreover, the production reduction plan subsequently announced by Saudi Arabia was combined with the resource production reduction and compensatory production reduction of other countries, and the total reduction of crude oil far exceeded expectations. The balance between crude oil supply and demand is closing rapidly, and in the first quarter, expectations for a slight accumulation of inventories have shifted to an accelerated depletion of inventories. Until the global epidemic does not worsen in the next quarter and demand is not further impacted, the fundamentals of crude oil will be better than expected. Therefore, the apparent cost driver of PTA still exists.
From other potential factors, the increase in naphtha heating demand in winter has pushed up the price of liquefied petroleum gas and reduced Liquefied petroleum gas has been used as a substitute for naphtha as fuel oil, thereby promoting the growth of naphtha demand; affected by travel restrictions due to epidemic prevention and control, Asian gasoline cracking prices have continued to fall. Therefore, the naphtha crack spread may continue to remain high in the first quarter.
The recent performance of PX processing difference is relatively weak, mainly because the repair of PX’s own supply and demand balance is far less than expected. The main reason is that the performance of PTA on the demand side is not as good as expected. A 2.2 million-ton unit in East China has the risk of parking, and the PTA unit expected to be put into production on the demand side in the first quarter has also been delayed. Therefore, we believe that it is difficult for PX processing difference to be driven upward in the short term. Even if it rises slightly, the space will come from the profit concessions of upstream processing differences. This makes the PX processing difference and naphtha cracking price difference tend to be slightly stronger in balance, which is conducive to the stability of the cost end.
From the perspective of supply and demand, the supply and demand of PTA in the first quarter is still accumulated. However, if a 2.2 million-ton unit in East China is shut down and a 2.5-million-ton unit in South China is put into operation less than expected, the pressure on the supply side may slow down; while on the demand side, based on expectations for the recovery of market demand after the vaccine is released, the seasonality of polyester The decline may be less than previous market expectations, so the PTA supply and demand in the first quarter is expected to accumulate around 1.2 million tons. The improvement in supply and demand has alleviated the pressure of pessimistic expectations in the market, which to a certain extent is also conducive to rising prices. However, the fact that supply and demand are accumulating exists, and although it has been ignored in the short term, it is still the main negative factor in the market.
PTA processing fees may also be gradually compressed due to accumulation of supply and demand, which is not conducive to an increase in absolute prices, but the extent is very limited.
Therefore, our recent cost-driven logic has not yet ended, and the upper space still depends on crude oil. From the perspective of the market outlook, if the cost side loses momentum, supply and demand or relay costs will become the main factors affecting the market before and after the Spring Festival. The downside space is also given by crude oil and PTA processing fees, and the space may be small. In the medium and long-term market, the logic of improving supply and demand and rising costs and focusing on prices still exists. </p