Overview:
External crude oil prices continued to adjust last week, with the U.S. crude oil 10 contract losing 5.37% on a weekly basis to close at $37.39. The Brent oil 11 contract’s weekly decline was slightly larger than that of U.S. oil, which was 5.74%, closing at $39.92. Crude oil prices in the external market ended four consecutive months of steady gains, with a sharp correction this month, and prices have returned to June levels. The domestic SC crude oil 11 main contract had a deeper correction than the external crude oil during the week, with a weekly decline of 13.02%. It rebounded slightly by 0.65% in the night session, ending two consecutive weeks of strong momentum in the intraday session. Last week it was significantly weaker than the external market.
As of the reporting period, the cumulative number of confirmed cases in the United States reached 6.67 million, and the number of deaths was 198,100. The number of new cases increased by 9.11 in a single day and climbed again to 48,000. The overall trend is downward. The epidemic situation in India, Brazil, and Russia is still not optimistic. Among them, the cumulative number of confirmed cases in India reached 4,758,600 last week, surpassing Brazil and ranking second in the world. The number of new cases in a single day also hit a record of 9.12, with a record high of 94,400.
The weaving operating rate basically remained stable last week. The polyester plant continued to be put into operation, with the production capacity base adjusted to 62.05 million tons/year. The load fluctuated from high to high, and the load rose to 92.50% as of last Thursday.
PTA:
PTA in stock The average internal price basically showed a downward trend last week, and fell sharply to 3,415 yuan/ton last Friday due to a sharp correction in the cost of crude oil. The PTA load dropped slightly last week to 84.30%. The main processing gap of TA disk widened sharply to 922 at the beginning of the week and then narrowed sharply, to 785 last Friday. TA’s spot processing differential widened slightly to 682 at the beginning of the week and then narrowed significantly during the week, reaching 588 on Friday. The PX-NPT spread is still fluctuating at a low level, widening slightly last week and reaching $169 last Friday.
Ethylene glycol:
Last week, due to concentrated unloading, port inventories rebounded significantly. As of September 7, the MEG port inventory in the main port area of East China was approximately 1.487 million tons, a significant increase of 78,000 tons from the previous period. According to shipping reports, from September 7 to September 13, the total arrival volume of the four major ports is expected to be 193,000 tons, which is a neutral level. Shipments from Zhangjiagang’s mainstream reservoir area rebounded significantly at the end of August and dropped again in early September. The difference between actual port arrivals and planned port arrivals has narrowed, and port stagnation continues to ease. It is expected that port inventories may still accumulate slightly, which is smaller than last week. Delays in the commissioning of new domestic equipment and failed restarts have resulted in limited recovery in domestic supply. Overseas equipment will continue to be shut down for maintenance, and port arrivals may continue to decline in the future. Domestic and foreign supply remains differentiated. The correction in the cost of crude oil last week drove the center of gravity of ethylene glycol prices downward, which may provide short-term and long-term opportunities.
Cost and Profit
1 Raw material market
1.1 Crude oil, NPT, PX
Based on cfr Japan naphtha, naphtha (cfr Japan) It basically showed a downward trend last week, falling to US$378.5/ton last Friday. The external crude oil market continued its adjustment last week, with the US crude oil 10 contract losing 5.37% on a weekly basis to close at $37.39. The Brent oil 11 contract’s weekly decline was slightly larger than that of U.S. oil, which was 5.74%, closing at $39.92. Crude oil prices in the external market ended four consecutive months of steady gains, with a sharp correction this month, and prices have returned to June levels. The price difference between naphtha and Brent crude oil widened sharply to US$100.62 during the week and then narrowed sharply again, reaching around US$86 last Friday. The price difference between naphtha and WTI crude oil followed a similar trend, widening significantly during the week to US$122 before narrowing again. It narrowed to around $104 last Friday. The price of PX (cfr China) fluctuated within a narrow range during the week after falling sharply last Monday, reaching US$547/ton on Friday. The PX-NPT spread is still fluctuating at a low level, widening slightly last week and reaching $169 last Friday. PX Asia’s operating rate increased slightly, and PX China’s operating rate rebounded sharply from the previous week.
2 Changes in costs and profits
The average spot price of oil-based ethylene glycol remained stable this week compared with last week. As of last Friday, it was 3,835 yuan, and the average price during the week was about 3,890. yuan, which is equivalent to a coal-based contract price of approximately 3,790-3,840 yuan. The chart is based on the nearby spot price of 3,550 yuan/ton. The load of coal production has rebounded for four consecutive weeks, and the loss of coal-to-ethylene glycol has basically remained unchanged week-on-week. According to research, the current average coal production cost is 3700-3800, and the actual loss is less than calculated by the formula. The cash flow loss of externally produced ethylene glycol has once again worsened to around -$46. The cash flow of naphtha to ethylene glycol turned a profit, with a slight profit of US$12/ton. The cash flow loss of the methanol MTO production route sharply increased to 1131 yuan at the beginning of last week, and recovered slightly during the week, and was around -1081 yuan/ton by last Friday. Except for the naphtha production route, all ethylene glycol process routes are still at a loss, and the recovery of coal production profits has triggered the restart of the device for four consecutive weeks.
Supply
1 Equipment maintenance status
Starting from September 1, 2020, the polyester production capacity base has been revised upward to 62.05 million tons, with the addition of Yisheng Hainan 250,000 tons (supporting the production of polyester bottle flakes), Nantong Hengke 200,000 tons (currently temporarily producing glossy slices) equipment. A device that was inspected in early August last week was restarted, and the overall load increased slightly. As of last Thursday, the polyester load was at 92.60%. </p�� increased by 1.8 days, and DTY inventory remained basically stable compared with last Friday, falling slightly by 0.1 day. Polyester staple fiber stocks rose sharply by 2 days last week to 5.4 days from the previous week. The overall shipments from polyester bottle flake factories slowed down last week, and the average inventory in stock rose to more than 25 days. The inventory of polyester staple fiber is at the equilibrium level for the same period in the past; the inventory of polyester filament and polyester bottle flakes both maintain the highest level for the same period in the past.
2 Terminal situation
Last week, the operating rates of looms and texturing in Jiangsu and Zhejiang were basically stable, with a slight increase. As of now, the operating rates of looms and texturing are at 76% and 80% respectively.
The inventory days of gray fabrics in sample weaving enterprises in Shengze area have continued to rise since 5.25, reaching a maximum of 45.5 days and currently falling to 44 days. The peak season turning point may have appeared, and the extent of destocking is expected to be limited in the later period. The average monthly transaction volume of China Textile City in July was 8% higher than the same period last year. It fell sharply in August, 31% lower than last year. There may not be a clear distinction between off-peak and peak seasons this year, and at least we haven’t seen peak season performance yet. We predict that the peak season in the second half of the year may be delayed, and the intensity of the peak season may be weaker than in previous years, or it may form a pulse, but the maximum transaction volume will be better than that in the first half of the year.
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