Recently, the spot processing fee of PTA has dropped to around 450 yuan/ton. If the production capacity of Honggang Petrochemical and Yisheng New Materials can be released as scheduled in the first quarter, there will be room for compression of PTA processing fees. Under the current processing profits, the market’s willingness to start production is still strong. In addition, downstream polyester is facing seasonal maintenance, and the pressure on PTA inventory is still high.
The picture shows the inventory days of polyester filament
Recently, the advancement of vaccines has prompted the PTA market to be optimistic about the future Expectations for improving demand have increased. Although the supply of PTA is still loose, the absolute price of PTA has been rising due to the increase in costs and the promotion of funds. It is expected that PTA prices will continue to oscillate strongly before downstream demand weakens significantly.
Strengthening crude oil boosts market sentiment
With the continuous rollout of COVID-19 vaccines, market expectations for future demand recovery have steadily increased, and international oil prices have taken the lead in rebounding. In the past two months, WTI crude oil has The cumulative increase is more than 30%. Driven by the rise in oil prices, the closer downstream products are to oil, the more obvious the rise will be. During the same period, the price of naphtha has increased significantly, and is currently close to US$500/ton. With the overall rise in market prices, upstream profits have recovered significantly, and the Brent-PX price difference has reached US$280/ton, the highest since May 2020.
Due to the rapid growth of PX production capacity in the past two years and against the background of loose supply, PX processing fees have been greatly compressed. In 2020, the minimum production and processing fee for PX dropped to a low of US$120/ton. Looking at the market outlook, PX production is relatively limited in the first half of 2021 (mainly focusing on the second phase of Zhejiang Petrochemical). Compared with PTA production capacity in the same period, the growth rate has slowed down significantly. Therefore, PX processing fees are expected to be repaired. At the same time, due to the mismatch in the production cycles of PX and PTA, the center of gravity of PX prices is also expected to move upward slightly.
The short-term demand side still has a pulling effect
Affected by the epidemic, the operating load of polyester factories was low in the first half of 2020. It was not until July that the cumulative output of the polyester industry achieved positive growth year-on-year. . After the National Day and Mid-Autumn Festival, affected by macroeconomic stimulus and the cold winter, the PTA demand market showed signs of improvement. In this round of overall rise in the PTA industry chain, the downstream market’s vigorous replenishment of inventory has become a booster. As of the end of 2020, the inventories of POY, FDY and DTY were 15 days, 15 days and 22 days respectively, which is about half of the peak inventory in 2020. The inventories of various polyester products are still in a healthy situation.
In the near future, the average operating rates of polyester factories and Jiangsu and Zhejiang looms are around 89% and 76% respectively, which will provide some support for PTA prices in the short term. It is worth noting that with the recent sporadic cases of new coronavirus pneumonia in the country, control has become stricter again, and with the Spring Festival approaching, textile workers may gradually return to their hometowns after mid-to-late January, and the downstream demand-stimulating effect will weaken.
High PTA inventory has become a hidden danger
PTA production capacity has surged, coupled with the impact of the epidemic on downstream industries, causing the industry to continue to accumulate inventory. As of the end of 2020, PTA social inventory has reached a high of 4 million tons. In the near future, both Sichuan Energy Investment and Zhuhai BP have restarted, Fuhai Chuang’s maintenance equipment will also restart in late January, and Fujian Baihong’s 2.5 million tons of new production capacity is expected to be put into operation in the near future. However, the expected maintenance capacity in January is relatively limited, and currently it is mainly It is a 2.2 million ton plant of Hanbang Petrochemical.
Recently, the spot processing fee of PTA has dropped to around 450 yuan/ton. If the production capacity of Honggang Petrochemical and Yisheng New Materials can be released as scheduled in the first quarter, there will be room for compression of PTA processing fees. Under the current processing profits, the market’s willingness to start production is still strong. In addition, downstream polyester is facing seasonal maintenance, and the pressure on PTA inventory is still high.
To sum up, the current phased supply and demand contradiction of PTA is not yet acute, and crude oil still provides certain support to the market. PTA prices are expected to continue to oscillate on the strong side. Pay attention to the first-line resistance of 4000 points. After mid-to-late January, the release of Baihong’s new production capacity and the phased maintenance of polyester factories will intensify the contradiction between supply and demand, and PTA prices are likely to weaken. (Author’s unit: Hongye Futures)
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