Overview:
Outside crude oil dropped sharply at the end of October. The monthly decline of the main SC crude oil 12 contract was 16.09%, far exceeding the external market.
The epidemic broke out again in Europe and the United States. The epidemic broke out again in the UK and France. The number of new cases in the United States exceeded 100,000 on 10.30 in a single day. As of the reporting period, the cumulative number of confirmed cases reached 9.4 million and the number of deaths exceeded 230,000. The epidemic situation in India, Brazil, and Russia is still not optimistic. Among them, the cumulative number of confirmed cases in India has reached nearly 8.184 million.
PTA:
The average price of PTA spot prices first rose and then fell in October. PTA spot processing difference is still 500-600, and the main futures processing difference is 700-800, maintaining a neutral level. PTA load picked up at the end of October and may drop again in early November, but the magnitude is not large. It is still facing pressure from the second phase of Xinfeng to be put into production, and the impact of supply-side fluctuations is limited. Polyester continues to be put into production, and the overall load in October is above 90%. It is expected that the load level will still be maintained at above 90% in the first half of November, and may begin to weaken in the second half of November. The operating rates of looms and texturing in Jiangsu and Zhejiang remained high and stable in October. As of now, the operating rates of looms and texturing are 92% and 94% respectively. It is still the highest level for the same period in history. The transaction volume of China Textile City in September was 39% lower than the same period last year. In October, pulse-type trading volume was as expected, which was 19% lower than last year and improved month-on-month. At present, the most serious loss of polyester is in bottle flakes, while filament yarn has turned a profit. Although the profit of short fiber has been slightly compressed, it still maintains high profit. In October, PTA destocked its inventory in stages, and it is expected to accumulate again in November. Crude oil has fallen sharply, costs have fallen, and the contradiction between supply and demand may intensify in November. PTA’s weakness is difficult to change, and the allocation is bearish.
Ethylene glycol:
EG2101’s main basis fluctuated widely, and strengthened significantly to -23 at the end of the month. As of October 26, the MEG port inventory in the main port area of East China was approximately 1.226 million tons, a decrease of 50,000 tons from the previous period. The overall destocking of the port in October was 150,000 tons. According to shipping reports, from October 26 to November 1, the total arrival volume of the four major ports is expected to be 123,000 tons, with arrivals continuing to be low. As of October 29, the overall operating load of domestic ethylene glycol was 67.22%, of which the operating load of coal-based ethylene glycol was 58.77%. Domestic supply rebounded sharply at the end of the month, and new devices continued to be put into production. Overseas arrivals to Hong Kong continue to be low, and the demand side may still maintain around 90% of construction starts in November. The destocking trend may still be maintained in early November, and there may be a short-term rebound, which may be weaker than in October. The rebound may be short selling.
Cost and profit
1 Raw material market
1.1 Crude oil, NPT, PX
Naphtha (cfr Japan) fell slightly in October, reaching US$391/ton as of last Friday. The decline of external crude oil expanded in the last week of October, with the main Brent 01 contract falling by 8.97% on a weekly basis and 10.11% on a monthly basis in October; the main WTI 12 contract fell by 10.21% on a weekly basis and 10.39% on a monthly basis in October. The monthly average price difference between naphtha and Brent crude oil is US$86/ton; the monthly average price difference between naphtha and WTI crude oil is US$100/ton, narrowing slightly from the previous month. The monthly average price of PX (cfr China) is US$540/ton. PX supply and demand improved slightly in October under the influence of the commissioning of the second phase of PTA Xinfengming plant. The PX-NPT spread widened slightly, reaching $167 at the end of the month. PX Asia’s load declined slightly, and China’s operating rate continued to recover. PTA spot processing difference is still 500-600, and the main futures processing difference is 700-800, maintaining a neutral level.
2 Cost and profit changes
The monthly average average spot price of oil-based ethylene glycol is 3814 yuan/ton, stable compared with the average price in September. In October, the overall price rebounded in the first half of the month and fell in the second half of the month, driven by terminal demand. Spot prices near coal production began to decline at the end of the month, currently falling to 3,550 yuan/ton. Many domestic units were restarted, and coal production load rebounded significantly at the end of the month. The cash flow of externally produced ethylene glycol recovered significantly in October and recovered to -$43/ton at the end of the month. Naphtha-based ethylene glycol turned a profit in October, with a small profit of about US$25 at the end of the month. The cash flow loss of the methanol MTO production route increased significantly month-on-month in October, and the loss increased to -1,352 yuan/ton by the end of the month. After two consecutive weeks of recovery in losses for coal-to-ethylene glycol in mid-October, the losses intensified again at the end of the month. The profits of each process route of ethylene glycol are differentiated.
Supply
1 Equipment maintenance situation
PTA domestic equipment: Most preliminary maintenance equipment was restored at the end of October , the load rose again to 86.4%. It may have dropped again in early November due to the maintenance of the Yisheng unit, but at the same time it is also facing pressure to put into operation the second line of the second phase of Xinfengming. This unit will be included in the production capacity base in November.
Table 1: PTA’s recent major device changes
Data source: CCF Zhongzhou Energy and Chemical Research Institute
Ethylene glycol plant: 2020 Starting from October this year, China’s total ethylene glycol production capacity is 14.535 million tons, and the total coal-to-ethylene glycol production capacity is 5.19 million tons. Sinochem Quanzhou’s 500,000-ton unit and Shanxi Woneng’s 300,000-ton unit were newly added. As of October 29, the overall operating load of domestic ethylene glycol was 67.22%, of which the operating load of coal-based ethylene glycol was 58.77%. Domestic supply fell in the middle of the month and rebounded sharply at the end of the month. Many overseas installations have been restarted in the United States, many installations in Saudi Arabia and South Korea have been overhauled, and overseasOverall supply has not changed much.
Table 2: MEG’s recent major device changes:
Data source: CCF Zhongzhou Energy and Chemical Research Institute
New equipment put into operation: Shanxi Woneng Chemical’s 300,000 tons/year syngas production MEG unit was shut down at 10.20 and was undergoing maintenance for about 13 days. Xinjiang Tianye’s 600,000 tons/year device is restarting on October 27. Zhongke Refining and Chemical’s new 500,000-ton unit has discharged ethylene glycol normally at 10.30 and the product indicators are stable. The load is still being increased. The new 200,000-ton plant in Yongcheng, Henan is currently under trial operation.
2PTA inventory
PTA was destocked in stages in October, and the inventory at the end of the month rebounded sharply again, including PTA factory inventory and warehouse receipts The recovery is obvious.
3 Ethylene glycol import and port inventory
As of October 26, the MEG port inventory in the main port area of East China is approximately 122.6 million tons, a decrease of 50,000 tons compared with the previous period. In October, the overall explicit inventory at the port was destocked by 150,000 tons. According to shipping reports, from October 26 to November 1, the total arrival volume of the four major ports is expected to be 123,000 tons, with arrivals continuing to be low.
Demand
1 Polyester
1.1 Polyester operating rate and device changes
The polyester plant continues to be put into operation. Starting from October 1, 2020, the polyester production capacity base has been revised upward to 62.3 million tons, and Hengyi Haining has added 250,000 tons (supporting the production of polyester filament). In October, the polyester load remained stable at over 90%. It is expected to remain above 90% in early November. Polyester bottle flakes turned into a loss at the end of September (seasonal demand declined); short fiber profits continued to be the best, widening significantly in October, reaching a maximum of nearly 1,000 yuan/ton, and the current profit level is still 891 yuan/ton; filament average Profits turned around in October.
1.2 Polyester inventory
As of the end of October, Jiangsu and Zhejiang polyester yarn factories POY, FDY, DTY Equity inventories are at 11.1, 14.2, and 14.2 days respectively. Polyester staple fiber is still oversold and has negative inventory. The average inventory of polyester bottle flakes remains at a high level of around 30 days. The inventory of polyester staple fiber remains at the lowest level in the same period of the past year; the inventory of polyester bottle flakes still maintains the highest level in the same period of the past year; the inventory of polyester filament DTY and FDY remains at the equilibrium level of the same period in the past year, and the inventory of POY is still at the second high level in the same period of the past year.
2 Terminal situation
As of now, the operating rates of looms and texturing are at 93% respectively , 94%, still the highest level in the same period in previous years. The weaving load remained stable at a high level in October.
The gray fabrics of sample weaving enterprises in Shengze area were obviously destocked in October, and the inventory days are currently reduced to 40.5 days, which is still the highest level in the same period in the past. The transaction volume of China Textile City in September was 39% lower than the same period last year. In October, pulse-type trading volume was as expected, with trading volume 19% lower than last year, a significant month-on-month improvement. The current demand for terminals has not dropped, and stocking is phased. The next round of stocking may start in early November. November may still continue to rebound in the first half of the month and fall in the second half of the month, and the overall amplitude may be smaller than that in October.
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