Introduction: In the first half of the year, public health incidents caused oil prices to plummet, and PX fell to an all-time low. After May, PXN continued to decline, and most companies suffered losses. Load reductions and shutdowns were common among companies, especially in peripheral devices. Longzhong believes that there will be more new PTA production capacity in the second half of the year. With the arrival of the Golden Nine and Silver Ten, demand will increase, PXN will gradually rise, costs will rise, and PX prices are expected to recover upwards.
1. Lack of demand and cost-negative PX price fell to an all-time low
Figure 1 PX price trend
Up The price of PX showed a V-shaped trend in the first half of the year. From January to April, the price declined rapidly, and the price rebounded in May.
1) At the end of January 2020, the domestic public health incident broke out, coupled with the holidays of downstream PTA companies during the Spring Festival, the demand for PX slowed down, but at the same time in December 2019 and January 2020 At the end of the month, Zhejiang Petrochemical’s 4 million tons of PX units were put into operation, and the supply of PX increased. At the same time, the crude oil price war between Russia and Saudi Arabia at the end of February caused oil prices to plummet, costs fell, and supply increased, but demand shrank, resulting in continued decline in PX prices from January to April. , and on April 22, it fell to the lowest point of US$432.5/ton CFR, which was US$535.65/ton lower than the same period last year, a decrease of 53.33%, a record low since 2006.
2) In May, oil countries reached an agreement to reduce production. At the same time, overseas bans were gradually lifted, and oil prices rose. On top of this, the country began to encourage the resumption of work and production in March, and demand increased. PX prices increased in May. Initially, there was an upward trend. As of June 30, the price of PX closed at US$535/ton CFR, a decrease of US$303/ton, or 37.5%, from the same period last year.
2. Zhejiang Petrochemical goes into production and the PX market adds another tiger
Figure 2 PX production
Domestic production capacity of PX increased by 8.33 million tons in 2019 and 2 million tons in 2020, a year-on-year increase in output Larger. In March 2020, due to higher profits and strong production willingness of enterprises, PX output increased to a high point in the first half of the year. However, as profits decreased, PX output decreased. According to Longzhong statistics, the total output of PX in the first half of 2020 was 10.03 million tons, a year-on-year increase of 3.35 million tons, an increase of 50.15%.
3. Domestic production capacity explodes and PX imports continue to decline
Figure 3 PX import volume
Affected by the blowout growth of domestic production capacity, it can be seen from the figure that in 2020 PX import volume has dropped significantly year-on-year, and in May, it reached a low in the first half of the year. According to Longzhong Information statistics, PX imports from January to May 2020 were 5.75 million tons, a year-on-year decrease of 1.17 million tons, a decrease of 16.91%.
4. PTA production decreased year-on-year in March due to the impact of public health events
Figure 4 PTA production
Public health events have a greater impact on China’s domestic demand and exports of textiles and clothing, restricting PTA’s Demand, as can be seen from the figure, domestic PTA production decreased by 129,600 tons month-on-month in March, a decrease of 3%. From January to June 2020, the total output of PTA was 23.6152 million tons, a year-on-year increase of 1.7 million tons or 7.8%.
5. Demand recovery combined with cost support will make PX prices stronger than expected in the second half of the year
Good news: 1. June to July is the traditional off-season for polyester. Starting from August, the demand for polyester will gradually recover. With the arrival of the Golden Nine and Silver Ten, the demand for polyester will continue to increase, and the demand for PTA will increase. At the same time, Hengli 5th line has 2.5 million tons. And against the background that Xinfengming’s 2.4 million-ton new device has been put into operation, the demand for PX has increased significantly in the second half of the year.
2. The major crude oil-producing countries have reduced production significantly. Although the public health incident has led to a decrease in crude oil demand, as the industries of various countries continue to recover, crude oil is expected to be destocked in the third quarter. phenomenon, cost-end oil prices are on the rise.
3. From the calculation of supply and demand, in the second half of the year, PX added a total of 1.8 million tons of production capacity, and PTA added 7.4 million tons of production capacity. The increase in demand is even more obvious.
Negatives: 1. Public health incidents in some foreign countries are still serious, which inhibits the rise of crude oil.
2. External demand is generally weak, and industry players are still pessimistic about overseas apparel orders during the Gold, Nine and Silver Ten years.
3. The polyester inventory of weaving companies and traders is relatively high, and the inventory of polyester companies continues to increase, which may become the next flash point of conflict.
Price forecast: Driven by the cost side, polyester is expected to gradually recover after July. PX prices are expected to rise in the second half of the year. The high point of PX prices is expected to be in November-December. Raised to US$650/ton CFR level.
Construction start forecast: In terms of construction start, supported by the slow recovery of demand, Zhenhai Refining and Chemical has started up, and it is expected that PX construction is expected to run at 85% in the second half of the year.
Profit forecast: PXN’s current position is at an all-time low. With the slow increase in demand, production cuts and shutdowns of peripheral devices, etc., PXN is expected to continue to be repaired, as follows:
Table 1 PXN forecast for the second half of the year
Unit: US dollars/ton
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