As market demand gradually recovers, the margin of supply and demand will improve to a certain extent in the later period. However, this year is a big year for PTA production capacity launch. During the production capacity launch cycle, PTA will mainly have a weak trend.
Affected by the new coronavirus epidemic, PTA fell below the limit on the first day of trading after the Spring Festival, and then rebounded, but the rebound was limited. Since the Spring Festival, against the backdrop of a sharp decline in consumption, the terminal textile and apparel industry has faced impact. This article will analyze the potential trading opportunities of PTA in the later period from the perspective of fundamentals.
The room for growth in PX supply is limited
In March 2019, with the output of qualified products from the 2.25 million tons PX device in the first phase of Hengli Petrochemical, it was officially Announced the start of the domestic PX production capacity launch cycle. Since then, the price of PX has been falling, and the processing fee has been reduced from US$600/ton to less than US$300/ton. Old PX devices in Japan, South Korea and other countries have fallen into losses, and there has been a phenomenon of reducing load and production. However, the launch of PX units in my country is still proceeding in an orderly manner, and units such as Hainan Refining and Chemical, Hengyi Brunei, and Zhejiang Petrochemical have all been put into operation.
In the near future, the main contradiction of PX does not lie in the supply side. Although Zhejiang Petrochemical’s 4 million tons of production capacity has been fully released, according to statistics from information websites, Asia’s PX maintenance capacity from February to March was about 2.8 million. tons, to hedge the increment brought by new production capacity, the supply of PX has limited room for growth. However, PTA’s direct demand for PX faces the risk of falling, mainly due to its high profit and inventory pressure. Therefore, there will be a risk of weakening on the demand side of PX, and it is expected that PX will still show a low oscillation trend in the short term.
Processing fees are at a low level in the past 3 years
2020 will be a big year for the launch of PTA production capacity, excluding the 2.2 million tons of Xinfengming production capacity that has been put into production , Zhongtai Chemical’s 1.2 million tons production capacity and Hengli Petrochemical’s Phase I production capacity of 2.5 million tons. In the first half of the year, Hengli Petrochemical’s Phase II production capacity of 2.5 million tons will also be put into operation; in the second half of the year, there will still be Xinfengming Phase II’s 2.2 million tons production capacity, Hong Kong Petrochemical’s Phase II production capacity of 2.5 million tons. Hong Kong Petrochemical’s 2.5 million tons of production capacity, Ningbo Yisheng’s 3.3 million tons of production capacity and Fujian Baihong’s 2.4 million tons of production capacity have been put into operation. The annual production capacity growth rate is as high as 30%, and the large investment in production capacity will inevitably lead to compression of profits. At present, the cost advantage of new production capacity is very obvious, which can reach 300-350 yuan/ton. However, the cost of devices on the market, especially those with a production capacity of less than 1 million tons, is as high as 600-700 yuan/ton. During the production capacity launch cycle, small devices are bound to gradually give up market share due to losses, and then exit the market.
Currently, the processing fee for spot PTA is about 390 yuan/ton, which is at the lowest level in the past three years. Most devices have fallen into losses, which has led to an increase in equipment maintenance and load reduction. At present, the effective load of PTA has dropped to around 82%, down 4 percentage points from before the Spring Festival. More maintenance cannot be ruled out in the future. In terms of inventory, the current PTA social inventory has climbed to a high of more than 2.5 million tons, which is the highest level in recent years. Due to restrictions on truck transportation, most of the inventory is concentrated in PTA factories, and the pressure on the factories is relatively obvious.
Polyester products are facing greater pressure
Under the influence of this epidemic, the textile and apparel industry has been hardest hit. Judging from the polyester operating rate, after the Spring Festival in the past, the polyester load quickly rebounded to around 85%. However, after the Spring Festival this year, the operating rate dropped to 60%, and it is difficult to effectively increase it in the short term. In terms of inventory, after the accumulation during the Spring Festival, the POY inventory of polyester factories has climbed to 26.2 days, and other products have also accumulated significantly. At present, the polyester yarn market is priceless and most polyester factories have not quoted prices. As logistics gradually recovers in the future, polyester product prices will face greater downward pressure.
Data show that as of February 27, the weaving operation rate in Jiangsu and Zhejiang was about 20.5%. Although it has rebounded to a certain extent from the previous period, it is still at a low level. The main reason is that on the one hand, most migrant workers have not yet returned to work. , and a 14-day quarantine period is still required after returning to work; on the other hand, companies need to apply for a resumption of work to resume work, and can only resume work after passing the approval. Judging from the time, the fastest recovery time for downstream demand is early March.
Overall, with the gradual recovery of market demand, the supply and demand margin will improve to a certain extent in the later period. However, with the recent global epidemic outbreak, crude oil prices have fallen sharply, and the support from the cost side of PTA has weakened. . In the later period of the production capacity launch cycle, the center of gravity of PTA prices may shift downward, and the processing fee range will also shift downward. According to estimates, the processing fee of PTA this year is expected to be in the range of 300-600 yuan/ton. Investors can refer to the processing fee range of PTA for futures operations. </p
