Introduction:
“How much sorrow can you have? Just like a river of spring water flowing eastward Flow.” Such sorrow extended from the first quarter to the second quarter, but did not bring about the dawn of hope. In the first quarter, the PTA market was surrounded by bad news, but good news was absent, and the whole market was down. In the second quarter, the PTA market was clear of clouds, and it was still difficult to see a rainbow. The negative impact of the Spring Festival holiday is short-lived. The fermentation of global public health incidents is the main fuse. The domino effect generated by international crude oil is fully fermented in the PTA market.
The first quarter was surrounded by negative news
Due to the public health incident in the first quarter The severity far exceeded people’s expectations and its scope expanded to the whole world. The recovery of demand from downstream factories is slow, and the tight logistics has almost disrupted some areas, which has led to a temporary delay in demand. In the mid-to-late period, some companies may respond to the government’s call and produce as much as possible, resulting in a significant increase in inventory pressure. In addition, the sentiment is cautious, and human resources in production, logistics and even sales are tighter than before, so this has added many variables to the recovery that should have occurred.
In addition, the “price war” between Saudi Arabia and Russia has once again stirred up waves. In early March, Russia and OPEC failed to agree on a new production reduction plan. The “boat of friendship” capsized at the drop of a hat, causing international crude oil prices to plummet. At the same time, domestic chemical products plummeted and almost continued to hit new lows. The PTA market cannot escape the “curse”, with prices hitting bottom again and again.
Figure 1 PTA futures price comparison chart
Source: Longzhong Information
As of March 31, the price of PTA closed at 3,135 yuan/ton, a drop of 52.50% compared with the same period last year. The closing price of the main futures contract closed at 3,222 yuan/ton, a drop of 50.46% compared with the same period last year.
Figure 2 PTA actual demand load trend chart
Source: Longzhong Information
As can be seen from Figure 2, the pattern of PTA inventory accumulation has begun to emerge in January. With the impact of the holiday, some downstream companies have begun maintenance status, the scissor gap between supply and demand begins to diverge. Subsequently, due to the fermentation of public health events, downstream pressure stemmed from inventory, some companies began to reduce production and load, and the contradiction between supply and demand entered the “late spring cold” ahead of schedule, with daily inventory accumulation reaching a maximum of 45,500 tons.
After entering March, several large-scale installations such as Fuhaichuang and Hengli Petrochemical Line 3 have successively entered maintenance, and the polyester load has rebounded. According to the actual demand load Look at supply and demand being in balance. However, after the maintenance of several sets of equipment was completed, supply and demand entered a freezing period again, and the contradiction continued to escalate. According to calculations by Longzhong Information, PTA supply reached 11.36 million tons in the first quarter, demand was 9.67 million tons, and the accumulated inventory was as high as 1.69 million tons.
Figure 3 PTA processing fee trend chart
Source: Longzhong Information
The average PTA processing fee in the first quarter was 536.89 yuan/ton, basically on the edge of profit and loss. For devices with a capacity of over 2 million tons, there is still room for profit in processing fees, but for devices with a capacity of around one million tons, the profit situation is not optimistic, and it cannot be ruled out that some companies are already at a loss.
Overall, the PTA market in the first quarter was frightening. Especially in March, due to the continued expansion of public health events in Europe and the United States, export orders in the weaving market shrank significantly and orders were cancelled. This is a common occurrence, causing downstream companies to suspend the purchase of raw materials. At the same time, weaving companies also have short-term stoppage plans, which will undoubtedly make the PTA market worse. The entire market is in a state of low prices, high profits, high inventory, and low demand.
Difficulties and obstacles in the second quarter
At present, PTA social inventory Already at a high level of 3.2 million tons, how to destock the market in the future has become the key. Under the current situation of high inventory and high profits, the PTA variables in the second quarter are relatively large. The maintenance of PTA factory equipment is not completely clear at present. According to estimates, the accumulated PTA inventory in the second quarter is still at a high level of 1.4-1.5 million tons. However, if there is a turning point in the market later, PTA processing fees may face pressure. When profits fall, it is not ruled out that PTA factories will be forced to shut down.
As for polyester, the Tomb Sweeping Day promotions have brought warmth to the factory, and finished product inventory has dropped significantly. According to Longzhong statistics, as of April 7, POY The inventory is about 7.5 days, FDY is about 11.5 days, and DTY is about 20.5 days. Even some companies with low prices are already in a short position. Therefore, after polyester factories experienced a wave of destocking, companies that had plans to reduce production in the early stage were more variable, or canceled their production reduction plans and focused on normal production. However, judging from the current supply and demand, the road to the warehouse is still “long and difficult.”
In the second quarter, we still need to pay close attention to the following points. First, the control of global public health events; second, the OPEC+ negotiations on April 9. The fermentation of global public health events has brought a significant drop in demand to the market, and the convening of the OPEC+ emergency meeting has affected the hearts of countless people in the industry, even though…�If an agreement on production reduction is reached, the market has already expected it since last week, and the overall stimulus may be limited. If there is no agreement or the production reduction is less than expected, prices may continue to fall and adjust.
Taken together, the current global public health incident has not seen an inflection point, and the economic trauma is difficult to see a significant recovery in the short term. The domestic market In the process of slow recovery, the mentality on the court is cautious and we will wait and see for the time being. Longzhong Information predicts that without significant benefits in the second quarter, the PTA market will continue to trend at a low level, and it will be difficult to move towards spring for the time being. </p
