On June 16, the first phase of Xinjiang Zhongtai Group’s Bazhou polyester project with an annual output of 1.2 million tons and an annual output of 500,000 tons of differentiated functional fiber project officially started construction in the Petroleum and Petrochemical Industrial Park of Korla Shangku High-tech Development Zone .
Project construction site
“The on-site groundbreaking ceremony officially begins” With the announcement by Lu Zhengping, Chairman of Xinjiang Korla Zhongtai Petrochemical Co., Ltd., the mechanical sound of the dynamic compactor officially kicked off the construction.
Project construction site
Huang Yongjun, deputy secretary of the Zhongtai Petrochemical Party Committee, vice chairman, and general manager of the polyester project, said that with the support and concern of party committees and governments at all levels, in accordance with Zhongtai Petrochemical In accordance with the work requirements of the group party committee, project design, equipment ordering and other work have been fully carried out. In order to ensure that the main body is capped at the end of this year, all personnel of the polyester phase I project will seize the golden period of construction and promote various work of project construction with high quality and high standards. It strives to be completed and put into production by the end of 2021.
Lu Zhengping said in an interview with the media that the main raw materials for the production of polyester are PTA and ethylene glycol. The 1.2 million tons/PTA project that Petrochemical has completed forms an upstream and downstream industrial chain. The project is planned to be completed and put into operation at the end of 2021, with an investment of approximately 3.4 billion yuan. The project includes an annual output of 250,000 tons of filament and an annual output of 250,000 tons of short fiber. After it is completed and put into production, it will achieve annual sales revenue of 3.76 billion yuan and value-added tax of more than 57 million yuan, directly creating employment for more than 600 people. Stimulate the employment of more than 50,000 people in downstream weaving, printing and dyeing and other supporting industry chains. It is understood that the polyester project with an annual output of 500,000 tons is a key project to realize the coupled development of the petroleum and petrochemical industry and the textile and clothing industry. It mainly produces filament and short fiber.
As the upstream and downstream of the polyester industry chain enter the production cycle one after another, the periodic mismatch of production capacity will bring about periodic problems. Supply and demand mismatch. This boom cycle was started by the polyester end. The large-scale production of polyester has supported the demand for PTA. As large-scale private refining and chemicals enter the production cycle, the supply of PX has increased significantly. The increase in raw material supply has brought about the collapse of PTA on the cost side. ; With Dushanzi Energy’s PTA entering into production, supply has increased significantly, while demand-side polyester is nearing the end of the boom cycle. Under the mismatch between supply and demand, the supply growth rate of PTA/MEG is higher than the demand growth rate of polyester. Basically The face changes from strong to weak. The most direct manifestation of the contradiction between supply and demand is that as of mid-May, the actual social inventory of domestic PTA has risen to 3.79 million tons, a new high in the past five years. The last time the domestic PTA inventory reached its highest level was in 2015, which was 2 million tons. The current inventory is nearly 90% higher than that at that time.
From the perspective of industry concentration, in recent years, major polyester manufacturers have accelerated their production speed, and industry concentration has continued to increase. Big, for leading polyester companies, after establishing the “must compete” for PTA, how to control the overflowing PTA production capacity of tens of millions of tons is the next big proposition for the company!
The actual contradiction between supply and demand of PTA has begun in advance
1. The tight supply balance has been completely eliminated Break
“High inventory is a manifestation of the PTA supply and demand balance being broken in advance.” Qiu Qianqian, PTA analyst at Jinlianchuang said , if there is no new crown epidemic, the industry generally expects that the oversupply of the PTA market will appear in the second half of 2020 – the large-scale new PTA devices of the industry’s leading companies are mostly planned to be put into production in the second half of this year.
According to incomplete statistics, in the second half of this year, it is expected that 10.5 million tons of PTA devices will be put into production, respectively involving Hengli Petrochemical Phase 5 project, Baihong Group’s Fujian Baihong project, Xinfengming’s Dushan Energy Phase 2 project, and Yisheng New Materials Project.
PTA’s market situation is not isolated. Upstream and downstream are transmitted to each other and closely related to market conditions such as crude oil and polyester. In March this year, Saudi Arabia launched a crude oil price war, causing global crude oil prices to plummet, which was transmitted to the PTA industry, manifesting in an overall decrease in the cost of production raw materials. During the same period, the domestic epidemic situation eased, the resumption of production of polyester downstream of PTA accelerated, demand rebounded, and PTA processing fees also resumed rising, driving high operating rates.
According to Qiu Qianqian, under normal circumstances, the income of PTA companies is calculated based on processing fees, and the average processing cost price in the industry is about 600. Yuan/ton, the price exceeding this price can be regarded as the profit of the enterprise.
Since 2017, due to the boost in new demand brought about by environmental protection upgrades, the polyester industry’s production capacity has begun to be concentrated. However, the growth rate of upstream PTA production capacity has failed to keep up with the pace of polyester release, and has been in a tight balance between supply and demand, resulting in high processing fees. As of mid-December last year, the average PTA processing fee during the year was 1,068 yuan/ton, which was the highest level in the past seven years, an increase of 9.2% compared with 2018, and an increase of more than 1.3 times compared with 2016.
Under the high profit level, PTA factories have a strong willingness to start operations. As of April 20, the operating rate of PTA companies remained at a high of 84.05%. However, due to the epidemic, although the downstream polyester operating rate has returned slightly compared with the early stage of the epidemic,��, but it is still relatively low, and due to the suppression of overseas epidemics, textile order exports have decreased, which has prompted PTA inventory levels to continue to rise and supply and demand have begun to become imbalanced.
As the new PTA production capacity of Hengli Petrochemical and other PTA companies is gradually released in the second half of the year, the industry’s excess problem will become more prominent.
Yu Guoliang, project manager of Sinopec Qilu Petrochemical Planning Institute, said that it is expected that the new PTA production capacity will reach 15.8 million tons this year, and the total supply The volume is close to 50 million tons. This year, the polyester industry plans to add about 8 million tons of new production capacity, half of which will be put into operation in the second half of the year or even delayed to 2021. It is expected that the total demand for PTA corresponding to the polyester industry this year will be about 40 million tons.
Based on this calculation, there will be a surplus of about 10 million tons of PTA production this year, equivalent to 20% of the total supply.
According to data from “Futures Daily”, last year, the actual effective production capacity of PTA was approximately 48.98 million tons; the output was 44.7 million tons , consumption was 45.02 million tons.
2. The oligopoly pattern intensifies
With the arrival of a new round of overcapacity, the elimination of backward production capacity will be inevitable. In the current round of overcapacity, the elimination of old equipment and smaller enterprises will be even greater.
According to incomplete statistics, there are currently about nine companies in the PTA industry with installations of less than 1 million tons, mainly including Fujian Jialong Petrochemical, Chongqing Pengwei Petrochemical, etc.
In recent years, most of the newly put into production in the PTA industry are large integrated refining and chemical plants with a capacity of more than 1 million tons. At present, the voice of the PTA industry chain is mainly concentrated in the hands of large enterprises. Competition among small and medium-sized enterprises is unfavorable and their living space is compressed. The industry will surely be reshuffled to seek a rebalancing of supply and demand.
According to bulk internal reference data, the PTA processing fee for Hengli Petrochemical’s new device is approximately 280-300 yuan/ton. , the processing fee cost of old equipment is generally 700 yuan/ton.
“Futures Daily” stated that the current PTA industry has shown an oligopoly pattern, and the top three leading companies are Yisheng Petrochemical, Hengli Petrochemical and Fuhua Fuhaichuang. Data show that last year, Yisheng Petrochemical’s PTA production capacity accounted for 26.2% of the industry’s total production capacity, Hengli Petrochemical’s production capacity accounted for 13.5%, and Fuhua Fuhai Chuang’s production capacity accounted for 9.18%. The three together account for 48.9% of the industry’s total production capacity.
3. Solutions for overcapacity
In recent years, PTA The industry’s integrated vertical development and large-scale trends are obvious, which has also become the biggest competitiveness of leading companies in the overcapacity stage. According to a research report by Oriental Securities, PTA, as the central link in the polyester industry chain, supports PX and polyester at the top. It is a “must compete” for both refining and polyester and has strong integration attributes.
Through expansion, construction and production in recent years, Hengli Petrochemical companies, Rongsheng Petrochemical and other companies have successively built industrial chain layouts such as crude oil-PX-PTA integration or PTA-polyester-textile integration. In May last year, Hengli Petrochemical’s 20 million tons/year integrated refining and chemical project was put into full operation. Last year, the company achieved revenue of over 100 billion and net profit tripled. Rongsheng Petrochemical’s profit increased by nearly 40% last year due to other reasons such as the commissioning of new projects.
In addition to continuously squeezing backward production capacity and occupying market share, it is also PTA to channel the pressure of excess production capacity through exports. One way out for enterprises facing overcapacity.
Zhuochuang Information stated that as the demographic dividend of China’s cheap labor force fades away, the textile industry in Southeast Asia and other places is rising, considering In the short term, the upstream polyester chemical fiber supporting facilities in emerging garment industry bases such as Southeast Asia and Africa are not complete. It is expected that these countries will still mainly rely on imported domestic polyester chemical fiber raw materials for processing and production. According to customs data, in March this year, China’s PTA export volume was 105,700 tons, a record high in a single month, and export volume increased by 91.06% year-on-year. </p
