In 2020, PTA has entered a new round of capacity expansion cycle led by major players in the PTA industry. In the second half of the year, PTA’s new production capacity is planned to be 10.5 million tons, far exceeding the 3.7 million tons increase in the first half of the year, adding up to the current 3.8 million tons social inventory, which will prompt PTA to enter a new situation of industrial competition. The launch of new production capacity is undoubtedly a catalyst for accelerating the rapid increase in the supply side of PTA. It is expected that PTA output in a single month in the fourth quarter may reach new highs repeatedly.
Table 1 New PTA additions in the second half of the year Capacity:
However, there are still more than 30 million tons of devices that have not achieved annual maintenance during the year, but according to the announcement at the end of June Judging from the PTA device maintenance plan for the second half of the year, the PTA device maintenance in the second half of the year is mostly concentrated in July and August, with approximately 10.3 million tons, 1 million tons in September, and 700,000 tons in November. There are almost no planned maintenance of large-scale PTA devices in the fourth quarter. In addition, the maintenance time is generally 10-15 days, and the impact on the supply side is relatively limited. Especially in the second half of the year, due to the continuous supply pressure on PTA after the centralized deployment of new production capacity, the industry will still be dominated by accumulated inventory. Centralized maintenance is only a phased improvement, and it is difficult to improve the market competition pattern.
For PTA, in this year’s global public health events, whether it is oil price fluctuations or changes in the macro situation, , all still occupy a relatively favorable position in the industrial chain. The most significant evidence is that even if PTA social inventory continues to accumulate to new highs, its processing price difference is still high.
Although PTA has benefited from rising costs and recovering demand recently, its long-term easing fundamentals are still difficult to change. .
PTA basically showed a state of accumulated inventory in 2019. Although the actual downstream demand has increased significantly, PTA production is too high and has been The trend of oversupply is initially revealed. Since the Spring Festival this year, the stagnant demand caused by the epidemic at home and abroad has also greatly accelerated the accumulation of PTA inventory. In March, inventory hit a record high. Although it has decreased slightly recently, it is still at a historically high level. Not only that, the volume of PTA warehouse receipts is also continuing to increase.
In the long term, it is optimistically estimated that if all the 6.2 million tons of new polyester plants planned for 2020 are put into operation, the demand for PTA will increase throughout the year. The volume is 2.5 million to 2.7 million tons. Looking back at PTA, the production capacity put into operation at the end of 2019 alone reached 3.7 million tons. If the new production capacity in 2020 can be put into operation as planned, the increased production capacity throughout the year will greatly exceed that of polyester. The mismatched gold bull market in which polyester expanded faster than PTA has passed, followed by the bear market mismatch period in which PTA expanded far faster than polyester, and PTA’s steep Contango structure is also a reflection of this fundamental.
In addition, the upward pressure on PTA prices also comes from its high profits that are not in line with fundamentals. Due to the unique structure of the industry, PTA currently has relatively high bargaining power in all polyester links, so it can still occupy a large share of profits in the industry chain, mainly from the price difference between upstream naphtha and PX compression. However, from a longer-term perspective, if the global epidemic can be suppressed and recovered, in the accumulating inventory cycle of oversupply, PTA processing price differentials will be difficult to maintain at a high level for a long time, which will therefore restrict the growth brought about by its optimism.
Comparing the growth rate of PTA production capacity with its average annual processing fee, it was found that when PTA production capacity is high and high, the processing of PTA Profits fell rapidly. The three production capacity expansions in history can clearly compare the changes in profits before and after the production capacity expansion.
PTA began to expand its production capacity in the second half of 2011. In November 2011, the PTA processing gap dropped from the high of 3,000 yuan in February. / ton, fell to a low of 762 yuan / ton, and PTA processing profits began to decline sharply. By the end of 2017, Fuhua Industry and Trade, Reignwood Petrochemical and Tongkun had put into operation a total of 5.65 million tons of new and old PTA production capacity. The effective production capacity and supply capacity of PTA increased significantly, and the processing difference of PTA dropped from 1,300 yuan/ton to 700 yuan/ton. Q4PTA has entered the production cycle in 2019, and processing fees have dropped from high levels. Currently, 3.7 million tons have been put into production. Hengli Petrochemical Line 5, Xinfengming Phase II, Fujian Baihong, Zhongjin Petrochemical and Honggang Petrochemical Phase II units are this year. The remaining five sets of equipment are expected to be put into production, with a total production capacity of 12.7 million tons. It is expected that the PTA processing gap will be squeezed under the large production cycle.
The newly put into production PTA production capacity is mostly technological innovation expansion, raw material unit consumption, energy consumption and other processing costs are significantly compressed, and under the prominent contradiction between supply and demand, the PTA industry will enter a stage of competition for processing fees, and the industry’s profitability may be compressed to the edge of loss, which will completely change the current high-profit status quo.
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