Recently, the Ningbo Municipal Work Safety Committee Office issued the “Notice of the Ningbo Municipal Work Safety Committee Office on the “4.30” Fire Accident of Ningbo Liwan New Materials Co., Ltd.” stating that the PTA device of Ningbo Liwan New Materials Co., Ltd. in Daxie Development Zone A fire broke out in the refining unit, killing two people on site.
It is understood that the company caused by the accident The production capacity involved is about 700,000 tons. At the same time, the downstream polyester filament market has also begun to usher in vigorous vitality in the past two days, with calls for price increases getting louder and louder than ever!
Under the influence of the unexpected failure of the PTA device and the price increase of polyester filament, it is expected that the short-term PTA price will also be affected by this. Get a boost. But overall, although PTA futures prices have rebounded in the past two days, the contradiction between supply and demand is difficult to alleviate in the short term. At the same time, there is still great uncertainty in the trend of international oil prices. At the same time, since PTA’s own hidden worries are still there, it is not appropriate to go too far at the moment. optimism.
Processing costs fell sharply
Although OPEC+ finally reached an agreement to reduce production, However, as the scale of production cuts is less than market expectations and it is difficult to offset the reduction in global crude oil demand caused by the new coronavirus epidemic, international oil prices have begun to fall since April 9, and the decline has significantly expanded in the past two days. The US oil front-month contract even suffered from weak fundamentals and The negative value appeared under the dual influence of tight remaining storage capacity. While this has aggravated market concerns, it has also caused PTA’s cost support to collapse again.
The picture shows the settlement price of the active contract of US oil and Brent oil (unit: US dollars/barrel)
The direct raw material of PTA is PX, which is made from naphtha, which is a light oil used as chemical raw materials processed from crude oil or other raw materials. The prices of naphtha and crude oil have a high correlation. According to estimates, since 2019, the correlation coefficient between the spot prices of the two is as high as 0.9402.
Due to the rapid expansion of PX production capacity and intensified market competition in recent years, the price of PX has fallen significantly in 2019. Therefore, the correlation coefficient between PX and crude oil spot prices from 2019 to the present Slightly lower, but still 0.6758.
After the crude oil price dropped sharply due to the “crude oil → naphtha → PX → PTA” process route, the prices of naphtha and PX also fell significantly. The low PTA processing cost has fallen again.
According to estimates, on April 24, the domestic PTA processing cost (excluding labor costs and fixed expenses) was 2,474.87 yuan/ton, a sharp decrease of 1,166.65 yuan/ton from March 6. Ton. Due to the decline in processing costs, even if the spot price of PTA also falls, the company’s processing profits are still considerable.
2020 is a year of rapid expansion of PTA production capacity. Multiple sets of PTA devices are about to be put into production. Intensified market competition has led to expectations of compression of PTA production and processing profits. However, the reality has shown a dramatic side. Since March 2020 to the present, the sharp drop in international oil prices has caused the price of PTA raw materials to also drop sharply, and PTA processing profits have rebounded. According to estimates, on April 24, domestic PTA processing profits (excluding labor costs and fixed expenses) were 655.13 yuan/ton. Although the processing profits have narrowed from 700-800 yuan/ton in the past few days, they are still in the near future. Relatively high level. Therefore, the production willingness of PTA companies has increased significantly, and the start-up of PTA equipment is at a high level.
The picture shows the PTA processing cost (excluding labor costs and fixed costs) (unit: yuan/ton)
Demand may still weaken
Due to the relatively considerable recent PTA processing profits, Therefore, although PTA futures prices have continued to fall and have hit record lows many times, PTA device operations are still at a high level and PTA supply is loose. On April 24, the daily operating rate of domestic PTA equipment was 92.77%, an increase of 17.26 percentage points from the same period in 2019; in the week of April 24, the weekly domestic PTA production was 928,200 tons, a decrease of 16,300 tons from the previous week, which was 16,300 tons less than the previous week. In the same period of 2019, there was a significant increase of 138,800 tons (in the week of April 17, domestic PTA weekly output hit a record high).
The picture shows the daily operating rate of PTA (unit: %)
However, while output has hit a new high in the past two years, there are hidden concerns about PTA demand. During the holidays, the production and sales of polyester downstream of PTA increased, and the previously high inventory pressure was released. Polyester companies that originally planned to control production also resumed normal production as the inventory pressure was relieved. Polyester production started to rebound day by day. In the short term, PTA Demand performance is acceptable. However, it should be noted that the relief of downstream polyester inventory pressure does not come from a rebound in demand, but from a simple inventory transfer.
As the overseas epidemic situation remains severe, the foreign trade of the terminal weaving industryExport channels are blocked and foreign trade orders have plummeted, forcing terminal weaving companies to implement production controls. Recently, the operating rate of terminal looms has once again dropped to a low of less than 50%. The decline in weaving operations has weakened the demand for polyester, and polyester inventory may accumulate rapidly. In the later period, polyester companies may still stop production or reduce operating load under inventory pressure, and the demand for PTA will also most likely weaken. On April 23, the comprehensive daily operating rate of polyester was 83.89%, a decrease of 7.17 percentage points from the same period in 2019; the daily operating rate of Jiangsu and Zhejiang looms was 48%, a decrease of 34 percentage points from the same period in 2019.
The picture shows the daily operating rate of Jiangsu and Zhejiang looms (unit: %)
High inventory continues to suppress prices
Since December 2019, domestic PTA social inventory has entered the accumulation stage . Under the influence of the epidemic, the resumption of work of downstream polyester companies has been delayed, and PTA social inventory accumulation has expanded. The average weekly inventory increase is about 250,000 tons, and exceeded 3 million tons for the first time on March 13 this year. In late March, many large-scale PTA installations in China were shut down for maintenance, which reduced the supply of PTA and caused a temporary decline in PTA social inventory.
However, with the completion of installation maintenance and PTA supply recovery, PTA social inventory has returned to a state of accumulation. High PTA social inventory continues to suppress PTA prices. On April 24, the domestic PTA social inventory was 3.4 million tons, an increase of 50,000 tons from April 17, a significant increase of 2.265 million tons from the same period in 2019, and a record high.
From a fundamental analysis, the current contradiction between supply and demand in the PTA market is still prominent, and the continued high domestic inventory has caused PTA prices to run weakly. Although PTA futures prices have rebounded in the past two days, the contradiction between supply and demand is difficult to alleviate in the short term. At the same time, there is still great uncertainty in the trend of international oil prices. Therefore, PTA futures prices will mainly operate in a weak oscillation, and the rebound height will be limited. In the medium to long term, overseas epidemics will determine the price trend of PTA.
If the epidemic situation improves, PTA futures prices are expected to rebound: On the one hand, an improvement in the epidemic situation can boost global crude oil demand. Combined with the OPEC+ production cuts that will be implemented in May, international oil prices are expected to stabilize, and PTA Cost support will be enhanced by then; on the other hand, after the epidemic situation improves, terminal weaving foreign trade export channels are expected to reopen, terminal weaving demand will increase, the contradiction between PTA supply and demand will be alleviated, and PTA inventory will also be reduced. However, if the overseas epidemic situation remains severe, the demand for PTA will weaken. Although companies can reduce supply to alleviate the contradiction between supply and demand by suspending production or reducing load, it will at most stabilize the PTA futures price, making it difficult to promote a rebound in PTA prices. </p
