The May WTI crude oil futures contract closed at -$37.63/barrel on Monday. As PTA and MEG futures prices decline, the cost-side support for polyester bottle flakes collapses, coupled with the slow recovery of domestic terminal demand, and the high raw material inventories of most downstream processing companies, the industry has a bearish attitude towards the market next week, and some even believe that the market will It will fall back to the low of 5,100 yuan/ton at the end of March.
First of all, let’s take a look at the main negative factors in the near future:
1. The output of downstream beverages is less than that of the same period
Source: National Bureau of Statistics
According to data from the National Bureau of Statistics, domestic beverage production in March 2020 was 13.842 million tons, a year-on-year decrease of 653,000 tons. . In April, as beverage companies across the country resume production and migrant workers are in place, beverage production will increase slightly. However, affected by the public health incident, terminal consumption has not improved significantly: the tourism industry is mainly based on self-driving tours in surrounding areas, and the resumption of major universities is still far away. So far, in many provinces in China, only senior high school students and junior high school students have successfully started school, and other grades will depend on the actual situation. Large-scale meetings are held online to avoid excessive concentration of personnel. Overseas health events have escalated, overseas imported cases have continued to increase, and the risk of local outbreaks still exists. Under these circumstances, soft drink consumption has decreased significantly.
2. Domestic market supply will continue to increase in the near future
From the picture above It can be seen that after entering March, the polyester bottle flake industry started operations and the overall supply increased steadily. Mainly because the 600,000-ton unit in Chongqing Wankai was successfully put into operation at the end of March; the 350,000-ton unit in the second phase of Dalian Yisheng was put into operation in early April; and the 600,000-ton unit in Chenggao line was restarted in early April. The total output increased by about 4,000 tons/day. Later, Hainan Yisheng’s 500,000-ton unit is planned to be put into operation at the end of the second quarter.
3. The huge inventory of PTA at the raw material end is difficult to digest
High processing fees have driven the start-up and output of the PTA industry to historically high levels, and the daily inventory accumulation range More than 10,000 tons. In terms of polyester products, due to the impact of overseas health events, demand orders for filament and slicing terminals have dropped significantly, and the industry’s start-up is lower than that of the same period. In terms of polyester staple fiber, as the popularity of non-woven specifications fades and polyester staple fiber returns to fundamentals, the price will fluctuate downward, and the industry will face a certain degree of overhaul. The polyester bottle flake market is in the traditional peak season in May and June, and the industry’s production capacity may remain high. It is difficult to continue to support the bottle flake industry only by the start of production. In addition, under the low fluctuation of crude oil, PTA’s daily inventory consumption is slow, and there are many obstacles to the rise.
Overall, the polyester bottle flakes market is relatively pessimistic, and the above negative factors suppress the market trend. Since all provinces will resume highway toll collection on May 1, downstream stocking may begin this week. However, as the market inflection point has not yet appeared, the industry is cautiously waiting and watching, and there is little willingness to take orders. In the face of rising freight rates in the later period and reduced prices during the May Day holiday, next week may be suitable for stocking up. Considering the uncertain factors such as crude oil in the later stage, do not have a bargain-hunting mentality! </p
