China has entered a period of PTA production capacity expansion. It is expected that new domestic installations will reach 16 million tons in 2021, and the production capacity growth rate will reach 28.02%. The overcapacity pattern has basically been established. The production capacity growth rates in 2022 and 2023 will also reach 7.79% and 8.24% respectively.
2019-2021 is the peak production period of PTA. New devices invested next year will basically be concentrated in the hands of industry leaders, and the concentration of production capacity will further increase. And the industry’s voice is getting stronger and stronger. Among them, Yisheng New Materials, Hengli and Honggang Petrochemical are all expansions of existing production capacity. The Fujian Baihong plant is an extension of polyester companies to the upstream; from the perspective of plant scale, the scale of a single new plant in 2021 will reach 2.67 million tons, all of which are large-scale devices, and the ton consumption cost is significantly lower than that of small and medium-sized devices of 600,000 to 1 million tons. The unit consumption cost is relatively optimized to the lowest range.
Statistical table of China’s PTA planned production capacity under construction from 2021 to 2023 (unit: 10,000 tons):
Source: Longzhong Information
According to Longzhong Information’s expectations, domestic PTA production in 2021 will be roughly between 50.10 and 50.6 million tons, an increase of 1.5 million tons compared with 2019, with a growth rate of 3.07%. Both the growth rate and the net increase are lower than in previous years.
By the end of 2021, domestic PTA production capacity will reach 73.09 million tons, with a growth rate of 28.02%. From the data point of view, both the production capacity base and the expansion growth rate are much higher than the demand side. The supply and demand pattern has basically been established, and PTA has entered a period of overcapacity.
At present, Longzhong Information understands that the newly added devices are basically supporting devices of industry leading companies or are downstream polyester companies extending upstream. They have advantages over small and medium-sized devices in terms of scale, supporting facilities, cost, etc. This part of the equipment and existing advantageous enterprises account for more than 60% of the total domestic production capacity, providing guarantee for production growth next year.
In addition, the domestic PTA industry has entered an era of stock competition, and the current PTA processing fees have not yet been reduced to a point where small and medium-sized devices cannot afford it.
Therefore, backward production capacity cannot be effectively eliminated from the market before the first half of the year, which is an effective supplement to market supply. In the second half of the year, we need to consider the impact on output of some small and medium-sized devices being squeezed out. </p
