Last month, the May contract of WTI crude oil futures suffered the craziest sell-off in history on the expiration date, creating the first negative oil price in history. I believe all traders are still fresh in their minds. Since the beginning of this year, worries about oversupply in the crude oil market have not dissipated. Coupled with the out-of-control epidemic, crude oil prices have continued to fall. While most people in the crude oil market are bearish, the good news in the raw material market in recent days has given the market bulls who have been complaining a shot in the arm. The bulls in the market have counterattacked, and crude oil prices have risen sharply. On the 18th, the intraday increase of the June WTI crude oil futures contract once exceeded 12%, and the intraday increase of the WTI crude oil futures July contract also expanded to more than 10% around 10 o’clock last night.
Plot reversal? Oil prices continue to rise, with many varieties in the energy and chemical sector rising
For WTI crude oil, which has surged near its expiration date, For the June futures contract, some analysts said that WTI crude oil rebounded because short sellers were unable to deliver in the market due to logistics restrictions. In sharp contrast with last month, today’s oil prices reflect the market’s optimism.
Goldman Sachs commodities chief Jeffrey Currie said oil demand could rebound to a level that exceeds supply by the end of this month. He noted that this was largely because all major oil-producing countries were cutting production. However, Currie added that about 1.2 billion barrels of crude oil inventories need to be reduced before oil prices recover. He believes this will happen in three stages.
The first thing to be reduced will be floating storage floating on the sea. It’s the most expensive way to store oil, so it makes sense that traders and producers would tackle it first to save money on tankers. Currie said that will happen sometime in the third quarter of this year. The total amount of oil removed from floating storage tanks will be approximately 450 million barrels. Currie said onshore oil storage will begin to decline in the fourth quarter of this year, by as much as 400 million barrels.
At the same time, news of a sharp rise in oil prices has stimulated the recovery of bulk polyester raw materials. The current supply and demand in the PTA market is tight, and suppliers are raising prices. From a cost perspective, the polyester market price will be boosted in the short term. Influence: On the 19th, PTA and ethylene glycol ended their long-term decline and both experienced good increases. In addition, the domestic polyester filament market price also showed a slight increase. Supported by strong fluctuations in upstream polyester raw materials, polyester spinning factories have steadily raised polyester yarn prices, ranging from 50 to 100 yuan/ton.
The sharp rise in crude oil has given the polyester market, which is under pressure, a chance to breathe. With the positive boost, can the polyester market fight back?
From the downstream demand side, the massive intervention of speculative buying last month caused the terminal production and sales rate to surge, which in turn caused the inventory of polyester finished products to fall from historic highs, creating inventory pressure. Significant relief. However, after the above-mentioned speculative buying disappeared, terminal consumption failed to pick up significantly. The inventory reduced before the holiday was not consumed by terminal companies. The probability of artificial hoarding was high, and the inventory was simply transferred but not digested. In addition, the operating rate of polyester companies has gradually increased. Driven by the surge in the operating rate of short fiber companies, the overall inventory of polyester companies has increased, but the operating rates of filament and bottle flake companies have basically remained stable.
In April, the production profits of domestic polyester companies have gradually fallen from the previous high. At this stage, only DTY among filament yarns is still profitable, while POY and FDY are near the break-even line. Judging from the current epidemic development situation in Europe and the United States and other countries, the phased peak has passed, and there are strong expectations for the resumption of work and production. Some orders for the downstream market have been placed, which will promote the demand for textile and apparel in the later period.
As far as PTA is concerned, in the past quarter, the social inventory of domestic PTA accumulated nearly 1.8 million tons, and the absolute inventory reached a historical high. More importantly, the spot processing fee of domestic PTA in the recent stage is significantly higher than that in March. When the upstream decline is greater than that of the downstream, the price difference between PTA and PX continues to expand. The processing fee during the month is basically 600-800 yuan. / ton, with the continuous expansion of production capacity, the above-mentioned processing fees are at a relatively high level, which also directly leads to the increased enthusiasm of PTA production enterprises. The operating load during the month climbed to 92%, further exacerbating the domestic PTA social inventory. accumulation. In addition, the price difference between upstream PX and naphtha fell from nearly $300/ton Zhihu at the beginning of the month to a minimum of nearly $240/ton, and then rebounded to around $270/ton. The price difference between the two is generally at a relatively reasonable level. As futures continue to be at a premium to spot prices, which in turn leads manufacturing companies to sell PTA on the futures market, the volume of warehouse receipts registered on the exchange has increased rapidly, and future delivery pressure will be obvious.
From the perspective of the MEG link, the accumulation rate of MEG stocks in the East China port area has slowed down in the recent stage. It climbed to a maximum of 1.25 million tons during the month and then fell back to 1.17 million tons. This was mainly due to the impact of port unloading. It is affected by slow and early clearance of some contracted tank capacity, but high inventory at ports may continue. From the perspective of production profits, since naphtha is obviously at a disadvantage, the profits of MEG produced from naphtha continue to remain high, with the highest profit exceeding US$100/ton and the lowest profit approaching US$50/ton. However, when the price of coal fell much less than that of crude oil, coal-based MEG companies suffered serious losses, and most of them lost cash flow. As a result, the operating rate of coal-based companies dropped sharply to around 35%, which also alleviated this to a certain extent. pressure on domestic supply.
Crude oil prices rebounded sharply, and the polyester market finally stopped feeling aggrieved!
The current rebound in crude oil prices has a negative impact on the commodity market.�� form a larger boost. As the source of the entire polyester industry chain, crude oil’s impact on market sentiment cannot be underestimated.
Although the market has been in a stalemate for a long time, polyester seems very frustrated, but we still have no choice but to look at the “face” of crude oil. If crude oil prices rise sharply, the downstream bearishness on the market outlook will ease, and the willingness to buy goods will be greatly increased. Market supply will be increased, and the improvement in market conditions will also be significantly boosted. The rapid manifestation of all this transmission effect is that crude oil is still the main determinant of the polyester industry chain.
In addition, considering that the worst period for the downstream market has passed, the unblocking of Europe and the United States and other countries will promote the market outlook. However, the traditional peak season has passed, and with the possibility of recurrence of the epidemic, domestic and foreign trade orders in the market are still weak, and polyester And the demand for replenishment in the terminal weaving market is still weak. Generally speaking, the recent ups and downs in the polyester market are due to the intertwining of long and short factors and the demand for the trend to return to fundamentals. The basic balance of supply and demand in the later period is still the trend.
Therefore, it is still the old saying: Whether the market can work or not depends on the strength of crude oil, otherwise everything will be in vain. Overall, the current deep-seated changes in the supply and demand pattern have established a strong pattern for crude oil, while the vagaries of the epidemic in global economies have further increased market concerns. But at the same time, industry insiders also said that the current crude oil prices continue to rise, and the mentality of both supply and demand is very subtle. To put it nicely, it is cautious, and to put it bluntly, it is “fear of falling.” But for now, if crude oil prices can rebound sharply, the entire polyester market will improve, and this optimism will continue to spread in the short term. </p
