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Last week, the ICE Brent November contract was unchanged from the previous week at $41.76/barrel. Since September, two sets of 5 million tons of production capacity of Xinfengming Phase II and Baihong will be put into production in the fourth quarter. However, the current pressure on the polyester end is highlighted. Under the pressure of inventory, companies have cut prices to destock, resulting in serious filament losses. The PTA processing gap continues to be compressed, and the PTA operating rate returned to a high of around 90% last week. On the cost side, crude oil rebounded slightly and then fluctuated within a narrow range, with limited support for downstream products. In the short term, it is difficult for PTA to see profits, and it is waiting for the maintenance of several large equipment within the year.
As for MEG, coal chemical plants are still being restored. In terms of new plants, Sinochem Zhanhua and Sinochem Quanzhou will be in mass production smoothly by the end of September, with an additional domestic production capacity of 900,000. tons; and there are many sets of units expected to be put into production during the year, and there is greater pressure for new investments in ethylene glycol this year. At present, the polyester end is experiencing cash flow losses, and there are expectations for a reduction; entering the fourth quarter, the demand for antifreeze will also weaken, and it is difficult to boost the demand side. Overall, the fundamentals of ethylene glycol are unlikely to be favorable in the short term.
The comprehensive operating rate of polyester this week was 88.62%, an increase of 0.06 percentage points from the previous month. The weekly output of the polyester industry was 1.0944 million tons. During the week, domestic polyester industry equipment restarted and overhauled. During the week, Lianda and Tiansheng units reduced production. However, the load of newly restarted devices has gradually increased, and the load of new devices has also increased. Therefore, domestic polyester output has shown a narrow increase this week, and industry output has increased slightly compared with last week. The average domestic polyester filament production and sales were 76%, an increase of 8% from last week.
The performance of local production and sales data during the week was acceptable, which led to a slight increase in the overall production and sales data during the week compared with last week. Overall, the high operating rate of downstream polyester can be maintained in the short term, and there is some support for upstream raw materials, so there is no need to be overly pessimistic.
Main risk points
The progress of the epidemic has triggered a sharp decline in downstream demand, which will compress raw material profits upward.
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