The PTA2009 contract began to rebound on April 22, with a maximum rebound of 3578 yuan/ton. . The main reason for the rebound is that crude oil prices are on the strong side and the cost side has obvious support. Regarding the subsequent evolution of PTA, the editor’s analysis is as follows:
1. Both ends of the supply and demand of crude oil have improved, and the speed of market rise depends on Demand recovery speed
OPEC crude oil production in March 2020 was 28.612 million tons, a month-on-month increase of 2861.2%, a year-on-year decrease of 4.70%, and far lower than the average level of the past five years. On April 9 and 12, OPEC and 10 non-OPEC oil-producing countries held the 9th and 10th special joint ministerial meetings respectively via video conference. The meeting finally reached a two-year production reduction agreement, starting from May 1 Effective from now on. This joint production reduction agreement has an unprecedented degree of production reduction. The production reduction agreement has a term of two years and different production reductions will be implemented in phases. In May and June 2020, production will be reduced by 9.7 million barrels per day. According to the production reduction agreement, Saudi Arabia will reduce production by 23% in May and June, with a target output cap of about 8.5 million barrels per day.
Russia’s production has dropped to 8.75 million barrels per day so far in May, close to the 8.5 million barrels per day production target for May and June set in the production reduction agreement. In addition, according to the latest official selling price released by Saudi Arabia in June, Saudi Arabia has increased the price of crude oil sold to Europe, the United States and most Asian regions. There are reports that Saudi Arabia’s average daily crude oil exports are expected to drop to about 6 million barrels in May, the lowest level in a decade.
U.S. domestic crude oil production fell by 200,000 barrels per day last week to 11.9 million barrels per day, recording declines for five consecutive weeks and falling to a new low since July 2019. In addition, many oil and gas companies in the United States have filed for bankruptcy. The number of U.S. oil rigs in the week of April 30 was 325, a decrease of 14.02% from last week. According to EIA data, in the week ending May 1, U.S. crude oil inventories increased by 4.59 million barrels to 532.2 million barrels, and an increase of 7.759 million barrels was expected. Although inventories have increased for 15 consecutive weeks, the increase in crude oil inventories is far lower than market expectations. The accumulation rate has slowed down significantly. As crude oil’s far-month premium narrowed, floating storage inventories began to fall after experiencing rapid growth in April.
Supply is shrinking, and the speed of subsequent demand recovery is critical. According to Rystad Energy’s forecast, global crude oil demand in May will increase by about 6 million barrels per day compared with April, and crude oil demand will experience a V-shaped rebound. However, the full-year demand in 2020 is expected to be about 88.7 million barrels per day, which will still be relatively high. It fell by approximately 10.9% in 2019.
In terms of the epidemic, most states in the United States have gradually begun to restart economic activities. The U.S. government has stated that even if the new crown epidemic will cause more cases or deaths, the United States must restart its economy. The lifting of the stay-at-home order has promoted further improvement in crude oil supply and demand fundamentals, and the market generally expects that the period of the worst damage to crude oil demand caused by the epidemic has passed. EIA’s latest weekly data shows that as of the week of May 1, U.S. gasoline consumption has increased for four consecutive weeks, and gasoline inventories have declined for two consecutive weeks, with a decrease of 3.158 million barrels that week, and an expected increase of 496,000 barrels. The situation was significantly better than market expectations.
On the whole, both supply and demand for crude oil have improved, and the speed of the market’s rise depends on the speed of demand recovery.
2. PX supply and demand are weak, suppressing PX-N processing fees
As of the week of April 30, China’s PX operating rate was 83.8%, and Asia’s PX operating rate was 76.5%. April to May is an intensive period for PX maintenance in Asia. PX production profits are still at the bottom, but the term structure contango has narrowed slightly, reflecting an improvement in margins. However, it is expected that the Asian PX balance sheet will continue to accumulate slightly from May to June. Therefore, it is judged that PX still needs to be pressed near the current production reduction line to attract unplanned maintenance in order to be rebalanced.
3. PTA inventory is in transit
The processing profit is acceptable Driven by this, PTA load remains high, and PTA social inventory continues to climb to historical highs. Domestic social inventory reaches around 3.5516 million tons, and the gap between supply and demand remains above 10,000 tons of daily accumulated inventory. It is expected that social inventory will hit a new high in May-June. . Looking at changes in equipment, it is mainly due to the restart of equipment operating rates of the following major manufacturers. The details are as follows: In mid-April, Xinjiang Zhongtai Kunyu’s 1.2 million tons/year unit increased to 80%; Fuhaichuang’s 4.5 million tons/year unit has restarted to 90%; Yisheng Ningbo’s 2 million tons/year PTA unit and Yadong Petrochemical The 750,000 tons/year device has been restarted. At present, the domestic PTA social inventory is about 2.8 million tons, which is still relatively high. PTA oversupply has become an industry consensus.
4. Weak demand inhibits the continued high production of polyester
In terms of demand, the operating rate of polyester remains high and fluctuates. According to statistics, the comprehensive operating rate of polyester remains at 85.18%, which is higher than the end of last month. 80.46% increased by 4.72%; the polyester filament operating rate increased by 1.53 percentage points from the previous month to 84.4%; the polyester staple fiber operating rate fell by 1.79% from the previous month to 88.05%, and the polyester chip operating rate fell by 1.53 percentage points from the previous month to 88.05%. 83.84%. However, the current overall polyester inventory is significantly higher than that in mid-April. According to statistics, as of the week of April 30, POY inventory was 16.9 days, FDY inventory was 17.4 days, and DTY inventory was 23.7 days. Theoretically, there is still storage space that can be accumulated, and it will take time to transfer the subsequent loom load reduction theory to the polyester yarn load reduction theory.
The operating rate of terminal looms was 54.54%, down 13.03 percentage points from 67.57% at the end of last month.
Terminal view: the cumulative growth rate of exports of clothing and clothing accessories from January to March was -20.6%; textiles from January to March The cumulative exports of clothing from January to March were US$45.26 billion, 17.7% year-on-year. Although there has been a rebound, the absolute number is still low;��Retail growth rate was -34.3%, reflecting that actual domestic clothing consumption was also poor. Polyester and gray fabrics were mostly just inventory transfers, that is, from upstream factory inventory to midstream and downstream speculative inventory. The growth rate of soft drink production from January to March was -20.8%, showing a certain marginal improvement. However, the current enthusiasm for outdoor activities is still suppressed, which has also dragged down the consumption of bottle tablets. Exports of bottle flakes in March were 337,000 tons, with a cumulative year-on-year growth rate of -23%; filament exports in March were 363,000 tons, with a cumulative year-on-year growth rate of 6%. Both have achieved an unexpected recovery, partly due to the timing mismatch, that is, the epidemic restrictions on logistics in February caused the export volume to shift back in February. From a smooth perspective, the cumulative export growth rate of filament + bottle flakes from January to March is still -9%.
On the whole, although polyester production started to fluctuate at a high level, terminal demand was weak, and polyester inventory was high, which inhibited polyester production. Subsequent start-up of ester and demand for PTA.
5. Conclusion
Taken together, PTA inventory is high and still accumulated. The weak terminal demand also inhibits the continued high production of polyester. The supply and demand side inhibits the strengthening of PTA processing fees. In terms of costs, both crude oil supply and demand have contracted, and the speed of crude oil start-up depends on the progress of demand recovery. In terms of operation, PTA holds long orders at low forward positions and is cautious in pursuing orders at high positions (high premium and high profit). </p
