Falling crude oil prices have led to weakening cost support, and PTA itself is also facing the pressure of accumulated inventory during the Spring Festival. The postponement of the resumption of work by enterprises in various places has made textile demand confusing, and the overall situation of the polyester industry chain is bearish.
1 Oil prices fell, cost support weakened
Affected by the domestic epidemic The market is worried about the slowdown in crude oil demand growth. The increase in U.S. crude oil inventories was larger than expected, the largest increase since November last year, and it also accelerated the decline in international oil prices. The prices of naphtha, MX and PX followed the decline of crude oil. The weakening of PX price directly lowered the production cost of PTA. Calculated with a fall of 28 US dollars/ton, the cost of PTA raw materials is expected to drop by 130 yuan/ton.
2 The installation start-up is on the high side. Inventory pressure is high
In terms of production capacity, Xinfengming’s 2.2 million-ton new device was put into operation in November last year, and Zhongtai Kunyu’s 1.2-million-ton device was put into operation in December. A total of 2.5 million tons of production capacity of Line 4 of Li Petrochemical was completed. Within three months, 5.9 million tons of new PTA production capacity was added. The total domestic PTA production capacity reached 58 million tons, and the effective production capacity exceeded 52 million tons. In terms of device start-up, before the Spring Festival, the start-up of domestic PTA manufacturers gradually rebounded to 89.5%. During the Spring Festival, Yisheng’s 2.25 million-ton unit restarted, and Yisheng Ningbo Line 1 and Reignwood Petrochemical’s 1.4-million-ton unit were shut down. The current total lost production capacity 4 million tons, PTA’s effective start-up rose to more than 90%, reaching the highest level in the same period in the past four years.
In the context of large-scale expansion of production capacity, the high start-up of equipment will bring about PTA Rapid accumulation of inventory. Before the Spring Festival, PTA’s social circulation inventory reached 1.417 million tons, an increase of 19.5% from the beginning of November last year. Later, as PTA production capacity expanded, polyester maintenance increased, and PTA companies maintained high operating rates, PTA inventory will increase significantly. At present, downstream demand has not been able to recover, and the inventory accumulation cycle will continue. Excessive PTA inventory will be the main pressure on PTA price trends after the Spring Festival.
3 Polyester requires more maintenance , Textile has been greatly affected by the epidemic
The seasonal off-season adds up to conflicts in the industrial chain, and the start of polyester production is not optimistic. The Spring Festival is the peak season for maintenance of polyester companies, and there will be a certain decline in the start-up of installations. At the same time, due to profit distribution issues in the industrial chain, polyester and polyester production losses are large. At the end of last year, some polyester companies stopped production to resist higher material prices. There has been a situation where the industry jointly reduced production by 30%. As of February 2, the domestic polyester and polyester production capacity under maintenance totaled 12.05 million tons, an increase of approximately 3 million tons compared with before the Spring Festival, and the planned maintenance capacity is approximately 2.5 million tons. Even with such a large-scale overhaul, it is difficult for terminal textile operations to increase, which will continue to accumulate inventory for polyester and polyester companies.
Recently, polyester companies have postponed their restarts and have been shutting down for maintenance. There are three main reasons:
First, many provinces require that work should not be resumed earlier than 24:00 on February 9. At the same time, even if it is assumed that workers return on time on February 10, workers still have to return to work on time. It will face a 14-day quarantine period, which will affect the operating rate of polyester in mid-February.
Second, the inventory pressure of polyester products is currently high. According to CCF data, as of February 3, the equity inventory is as follows, POY is 15 days, FDY is 6.8 days, and DTY is 6.8 days. 27.8 days. If actual inventory is taken into account, some factories will be a week or more higher. It is reported that terminal orders before the holiday are less than last year, which will gradually feed back to the direct demand of PTA. That is to say, the demand of PTA is still difficult to say optimistic at present.
Third, due to the current traffic control in many areas, Logistics is restricted, and polyester companies are facing shortages of packaging materials such as paper tubes, cartons, foam boards, and wooden pallets that are usually consumed a lot, resulting in some companies having to reduce production.
Textile and clothing exports are also facing the test of the epidemic. The epidemic has affected domestic textile and apparel production in the short term, and the impact on textile exports also needs attention.
4 Estimated overall trend in the first quarter
Estimated PTA inventory in the first quarter Gaoqi, pay attention to whether the PTA factory has any maintenance actions. Although PTA is in the seasonal accumulation channel during the Spring Festival holiday every year, under special circumstances this year, the PTA accumulation time will be longer than in previous years. As of January 3, the PTA social inventory level reached 1.98 million tons, approaching the inventory high of 2 million tons. It will still take some time for demand from downstream polyester companies to recover. It is expected that PTA inventory will continue to accumulate, forcing some PTA devices to shut down. overhaul, construction�Pay close attention.
In summary, our concerns about the current cost side of PTA are gradually decreasing, but since the downstream of PTA is mainly in the textile and clothing and other retail industries , it is expected that demand will be greatly affected in the first quarter. Currently, there is no maintenance action by major PTA manufacturers. PTA social inventory continues to rise due to the mismatch between supply and demand. Therefore, we expect that PTA will gradually stop falling and stabilize in the near future driven by the cost side, but the overall strength will not be strong.
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