Market Profile
Opinion Strategy
The OPEC+ production reduction agreement has been implemented, but the production reduction cannot cover the weakening demand caused by the epidemic. The EIA announced that crude oil, gasoline and distillate inventories are expected to increase significantly last week, which puts pressure on the oil market. , crude oil continued its decline after opening higher. As oil prices bottomed out again, the market trading atmosphere weakened. In terms of PX, due to the concentrated production reduction of equipment in March and April, profits have recovered from the lowest value in January. However, as the concentrated maintenance has passed, PX profit rebound is limited.
On the downstream polyester end, the profits of some products have recovered. Polyester chips and polyester staple fiber have significantly reduced inventory driven by the demand for non-woven fabrics for masks. However, the proportion of mask products is relatively small, and the amplitude will weaken in the later period. PTA prices fluctuated last week and the PTA inventory in polyester factories was relatively high. Further inventory increases were limited. Last week, the Zhengzhou Commercial Exchange approved two temporary inventory locations in Jiaxing and Zhangjiagang Free Trade Zones, and the buying intensity increased. Affected by the epidemic, downstream demand is weak, and a large amount of foreign trade in Europe and the United States may be postponed or canceled. The destocking process caused by early bargain hunting has slowed down and is transmitted to the upstream. The elimination of huge PTA inventories still requires large-scale production reductions in PTA equipment. At present, the spot processing fee has dropped slightly to 750 yuan/ton, and the profit is acceptable. The willingness to overhaul the PTA device is weak. Both Hanbang 70 and Zhongtai 120 have been restarted, and the operating rate increased by 1.73% from the previous week to 91.86%. PTA accumulated accumulated losses in May. The inventory trend remains unchanged, and the rebound is limited under high inventory pressure. Be wary of the possibility of PTA processing fee squeeze.
The operating load of EG continues to decline. The cost advantage of naphtha-based MEG is obvious compared with coal-based production. The load of coal-based equipment further dropped by 8.67% to 35.71%. Affected by this, the total load of MEG dropped by 6.91% to 58.1%. %, the lower operating load supports EG. Last week, MEG port inventory was basically the same as the previous period. It is expected that the decline of EG will be more limited than that of PTA.
Strategic suggestions
Put short positions on PTA and EG when prices rise; short PTA and long MEG arbitrage. (For reference only)
Main risk points
1. The progress of the epidemic has triggered a sharp decline in downstream demand, which will compress raw material profits upward.
2. OPEC+’s ineffective implementation of production cuts has triggered a further collapse of the center of gravity of crude oil prices.
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