PTA has become a star product recently, mainly due to the huge decline and huge profits for the short side!
In the past three days, the PTA January contract has increased its position by nearly 300,000 lots. The current position has reached a record high, while the price has dropped sharply by nearly 200 points.
Multiple opinions: It is at a historical low and is about to rebound. The industrial chain cannot bear continued losses, and shutdowns for maintenance are inevitable.
Short perspective: Huge amount of inventory, insufficient downstream demand, high inventory, spot price is much lower than futures, and it is still With a basis spread of 200 points, there is still room for decline. Due to the decline in crude oil prices and the appreciation of the RMB, production costs are still further reduced.
Each has his own reasons and does not give in to each other. The current view of the long side is long-term and has an expected nature, while the short side’s view is immediate and realistic. In the short term, the short side is still in an advantageous position.
I also took a look at the gross profit margins of PTAs of various listed companies today. Except for Rongsheng’s PTA, which has a gross profit of more than 20%, the gross profits of other companies’ PTAs are all. Within 10%, there are still 2%. This should be an old device. The gross profit of a new device may reach 10%. This shows that although the PTA continues to be weak this year, everyone is still doing well. As far as PTA itself is concerned, even if the old equipment is stopped, there will not be a big gap in supply, because there will be many new low-cost equipment coming later.
PX has also expanded rapidly in China in recent years. I have not found the gross profit of PX, so I guess it will not be very good. It seems that the whole year has been a loss. ExxonMobil’s 450,000-ton production plant was suspended for a month in early June, and there is currently no clear time for resumption of operations. New Nippon Oil’s 400,000-tonne PX plans to shut down starting in October 2021. There are also many companies that have reduced their burdens. In the PX area, some companies may accelerate their exit in the future.
Judging from many reports, the current total profits on the naphtha-PX-PTA line are relatively low, with most of the profits on the PTA line.
The reasons for the bulls if the market can eventually rise:
First, the overall naphtha-PX-PTA industry chain The loss of profits cannot be sustained in the long term. High-cost marginal devices are expected to be shut down.
Second, the decline in crude oil prices cannot be sustained for a long time. The probability of economic recovery next year is very high, and this year’s crude oil prices have eliminated a lot of production capacity and reduced investment in the crude oil industry. , crude oil prices are expected to rise in stages next year.
Third, it is unlikely that the RMB will continue to appreciate unilaterally. Once the situation in the United States becomes clear, the exchange rate of the RMB against the US dollar may become relatively stable.
PTA has limited growth, and the reasons why it can be shorted on rallies are:
First, the inventory is huge, even if a small number of devices are closed The huge inventory problem cannot be solved in the short term.
Second, new PTA devices are still coming, and the pressure will continue to increase.
Third, with Trump’s personality, he will never give up easily. As long as he does not bow his head, the United States will not be stable and the RMB will likely continue to appreciate. As costs continue to decrease, PTA has room for further decline.
There are several inertial thinking that we need to rethink.
First, does it mean that prices cannot rise due to overcapacity?
No. Overcapacity can only be a profit issue that determines the link. At present, it seems that the overcapacity in the PX production link is too large, so PX cannot rise and suffers heavy losses, which has led to the decline in PTA production costs. So PTA fell accordingly. We assume that many PX devices will exit next year, or the production will be significantly reduced, and the PX link will regain positive profits. Will the production cost of PTA increase?
Whether the production capacity of the steel industry is overcapacity or not, whether the inventory is high or not, prices will still rise.
Second, the PTA industry is currently forming an oligopoly. After squeezing out high-cost devices, they are very likely to form some form of price alliance, just like the current glass industry Same. They definitely have an incentive to improve industry profits.
Third, most of the firm offers currently on the market are sellers’ hedging, because the price on the market is higher than the spot price. But once the market price continues to plummet and falls far below the market’s expected price, will many parties enter the market to make inventory? If the price really falls to the position expected by many parties, they should have the motivation to build inventory on the market. If they buy from the spot market, the capital and warehouse costs required will also be huge. Let us boldly estimate whether the hedging power of both long and short parties will change if the market price continues to fall to 2800 points. Can we understand that the reason why the price has not rebounded sharply now is because the price has not fallen low enough, and the current price has not fully reflected the market’s pessimistic expectations?
The problem we are facing now is that we cannot predict the future!
We cannot predict changes in crude oil prices and RMB exchange rates, nor can we accurately measure the production costs of PTA, nor can we control the decisions of managers of PTA and PX production companies. We are faced with a black box.
In this case, we need to look for probability tools – time windows, trends – direction of fund changes and options – risk control tools to help!
We still believe that late November to early December is the time window when PTA prices may rebound to a certain extent. The greater the current price decline, the more fully the reaction will be to negative factors in the future. The rebound may be greater.
The price of PTA may not have reached the bottom yet, but the number of longs exceeds the number of shorts, and a periodic bottom will gradually form. We should wait and see whether it is long or short. The result of the game between the two parties. </p
