Physical crude prices are rising strongly almost everywhere from the Middle East to Siberia, from the North Sea to Latin America, underpinning a surge in futures markets.
The price of Brent crude oil on the ICE European Futures Exchange has nearly doubled in the past month, reaching around $35 per barrel, while U.S. WTI crude oil futures, which once fell into negative numbers, have also surged. All this is because global oil producers have cut supply by millions of barrels per day, tightening real supplies, and with China leading the way, demand has begun to pick up.
These developments have put many physical oil products at a premium of several dollars per barrel compared to their benchmark futures, whereas just a few weeks ago they were still trading at deep discounts. With the exception of the U.S. Gulf of Mexico, where Saudi crude flows in large quantities, prices for most physical grades have been rising for days or weeks. The strongest gains tend to be in oils most directly exposed to Chinese demand. Currently, demand in China has returned to levels close to a year ago.
Oil prices soared sharply, and the oil market tightened faster!
Russian ESPO crude oil, which is mainly shipped from the country’s Far East to Asian buyers, has reached a maximum premium of US$3.50 per barrel over the Dubai benchmark crude oil price this week. Just last month, oil products shipped in June were priced at a discount of US$4.80 from the Dubai benchmark price.
According to an unnamed trader, Iraqi Basra light and medium oil for June shipment was sold to a trader at a price of US$4.50-4.80 per barrel higher than the official selling price. Chinese buyers. The previous premium for May crude oil was US$2.50 and US$3.50 per barrel. In Angola, where China is a major customer, premiums have increased by about $1 in the past week, traders said. North Sea crude oil also rose sharply.
The strength underscores how quickly oil markets can tighten. While demand is picking up, OPEC and its allies are cutting global production by nearly 10 million barrels per day, and North American exploration companies are also rushing to stop drilling. “In short, OPEC+-led production cuts and global shutdowns are working,” RBC Capital Markets analyst Michael Tran wrote in a research note.
While the bank had expected the oil market to be in supply shortage by the end of June or early July, “preliminary indicators show that the glut is clearing 4-5 weeks ahead of our forecast timeline,” he said. Yes.
Polyester raw materials follow the fluctuations of crude oil. The unexpected shutdown of the 2.2 million tons/year PTA unit stimulates the market, and the supply pressure is expected to reduce
The price of crude oil Volatility is still the main theme followed by polyester raw materials. The global oil market is accelerating to restore balance, forming a bullish support for the market. Recently, PTA has experienced cost-driven price increases. Stimulated by positive costs, PTA has a strong upward momentum. On the evening of the 19th, Han The temporary shutdown of Bang Petrochemical’s 2.2 million tons PTA unit boosted the market. PTA futures market sentiment has revived, with prices leading chemical industry increases. As of the morning of May 20, May WTI crude oil rose by 67.6%, and PTA futures rose by 9.4%.
Since May, Ningbo Liwan’s 700,000-ton PTA unit has been shut down due to an accident, and the restart time has not been determined; Hanbang’s 600,000-ton PTA unit has been shut down for maintenance for some reason; Shanghai Petrochemical’s 400,000-ton PTA unit has also officially implemented planned maintenance, with a deadline of about one month. The current PTA operating rate is still high, but Hainan Yisheng’s 2 million-ton unit and Xinjiang Zhongtai’s 1.2-million-ton unit each have June maintenance plans It can be seen from the table that there are maintenance plans for several units in June, but the processing fee is currently at a high level of 700-800 yuan, and the industry is still cautious about this maintenance situation. According to the existing equipment maintenance plan It is estimated that if the maintenance of the above devices can be implemented, then the PTA supply and demand gap in May will be around 250,000-300,000 tons. If the Tongkun Jiaxing petrochemical device is added in June, the PTA supply and demand gap is expected to be 30,000 tons, but If the maintenance of Jiaxing Petrochemical is in July, the difference between supply and demand in June will only be around 40,000 tons. It can be seen from this that the accumulation of supply and demand has eased. Whether PTA can achieve destocking in the later period, the implementation of equipment maintenance is crucial. .
At the same time, the temporary shutdown of Hanbang Petrochemical’s 2.2 million tons PTA unit has boosted the market. It is understood that Hanbang Petrochemical’s total production capacity is 2.9 million tons/year, with 700,000 tons in the early stage. Small production capacity has been shut down, and the large device with a capacity of 2.2 million tons/year has been shut down in the evening. It is initially expected that the shutdown will last 20 days. The domestic effective production capacity base of PTA is 52.39 million tons, and this production capacity accounts for 5.54%. According to the current load estimates of PTA and polyester, after the device is stopped, the continuous accumulation speed of PTA in the early stage has basically ended, and supply and demand are roughly in balance. It is estimated that the overall accumulated inventory in May will drop to around 200,000 tons, which is roughly 100,000 tons lower than the expected accumulated inventory data at the beginning of the month. It is expected that the supply pressure of PTA will decrease in the later period.
Polyester filament upstream and downstream are experiencing strong support: textile orders are increasing, and the start-up situation is better than at the end of April
From the perspective of polyester, the sharp rise in crude oil and PTA has also triggered a boom in the production and sales of polyester filament. And�From the perspective of downstream weaving, entering the second quarter, due to the concentrated cancellation and delay of early orders, resulting in a continued lack of market orders, manufacturers’ gray fabric inventories once triggered a warning line, especially peripheral manufacturers. Due to their high production capacity, greater inventory pressure has led to a large Some weaving manufacturers’ production enthusiasm has obviously weakened, and they took at least 5 days of vacation during the May Day holiday, and some even took 7-10 days of vacation.
With the end of the holiday, major cluster manufacturers have resumed production one after another. However, what is different from the situation surveyed before the holiday is that after returning from the May Day holiday, many manufacturers have increased their operating hours, and some companies even Operating at full capacity.
It is reported that the current operating rate of water jetting in Shengze and Changxing areas has risen to around 70-80%, that of Xiaoshao circular knitting machines is around 50%, and that of warp knitting is also around 70%. Compared with the end of April, the market operating rate Generally rose by about 10%.
In addition, the recent sales of summer clothing fabrics have also been better than in the previous period. Some manufacturers said that they have already received hundreds of thousands of meters of orders after the holidays. In the early stage, due to the lack of domestic and foreign trade orders, the inventory of manufacturers of imitation silk fabrics increased significantly. As the domestic trade market gradually recovered, the sales of imitation silk in the market were boosted. Some products even caused a wave of market demand due to tight supply. , among which last year’s best-selling product, matte SPH, stood out. The manufacturer said that downstream demand was good, the market popularity was obviously better than other products, and the price was also rising steadily.
However, it should be noted that the current textile foreign trade environment is still weak. The recovery of orders for China’s textile and apparel products during the economic resumption of Europe and the United States has benefited the demand for polyester products and supported the market price and profits of polyester products. However, in late May, China’s textile industry’s export orders to Europe and the United States have not yet substantially improved, and the entire demand recovery may take 1 -February transition period.
In summary, with the partial resumption of work and market in Europe and the United States, the market’s expectations for global economic recovery have increased. Major oil-producing countries have maintained production cuts to support the market, and the rebound in demand for refined oil products in Europe and the United States has reduced the pressure of excess crude oil. , bullish funds in May crude oil futures have the upper hand, and short-term crude oil futures may continue to rebound, directly boosting the domestic chemical fiber market. Under the support of short-term costs, the market price of the polyester industry chain has generally risen, but the degree of recovery of demand in the terminal textile market in the medium term will determine the height of the rebound in the industry chain. </p
