During the Spring Festival, China’s PTA market was closed, with almost no transactions. Market prices in various places remained around the pre-holiday level of 4,750 yuan/ton.
Looking ahead to the post-holiday period, with the commissioning of Hengli Petrochemical’s new equipment and the industry’s large-scale and intensified nature, supply is expected to continue unabated. However, due to the impact of special events, the demand for downstream polyester has worsened, and the industry is new. The contradiction between supply and demand has intensified again, and PTA futures ended at the limit after the holiday. When will such pessimistic market sentiment end? When will hope for the PTA market reappear in the future?
A brief analysis from the perspective of supply, demand and macroeconomics.
The PTA futures market is closed during the holidays, and many traders in the spot market and downstream purchasers also leave the market for the holidays; PTA manufacturers have basically stabilized their operations. On January 27, with the restart of Yisheng’s 2.25 million tons/year device ( The unit started maintenance on December 29, which was originally planned to last for 15 days, but the restart was delayed for some reasons). The 1.4 million tons/year unit of Reignwood Petrochemical started maintenance (the planned maintenance lasted for one month). During the festival, Yisheng Ningbo 650,000 tons The PTA production line was stopped, and the PTA operating rate rose to 90.16%, an increase of 0.68 percentage points from before the holiday. During the holidays, downstream polyester companies mainly digest inventory and have no raw materials to purchase.
Overview of domestic PTA installation parking reduction plans in February
According to current statistics, only Sichuan could produce PTA in February. Touhe Huabin Petrochemical Company is in a new state of maintenance, and most other parking companies have been shut down in January, with limited production losses. The shutdown involves a total production capacity of 4.9075 million tons. The supply loss for the month is expected to be around 600,000-700,000 tons. When the market opens after the holiday, most market participants are working remotely, and the return time to the market is tentatively scheduled to be after the 15th day of the first lunar month.
Affected by special events, domestic polyester plant restart plans have been postponed one after another. During the Spring Festival, there were few domestic transactions, and corporate inventory pressure was high. In addition, market outlook was cautiously pessimistic, and many measures were taken to reduce burdens and avoid risks. Strategy, so the downstream polyester production starts are still on a downward trend in February, and the production starts are expected to drop to around 65%.
In terms of downstream terminal weaving, the start of the weaving, printing and dyeing industries in Xiaoshao and other regions has been postponed to around mid-February, and the initial inventory is mainly digested. As of January 31, the comprehensive start-up of chemical fiber weaving in Jiangsu and Zhejiang regions The rate was around 13%, a sharp drop of 45 percentage points from the end of last month. At present, some companies plan to start operations as early as February 10 (the seventeenth day of the first lunar month). In some areas, the start time is later or postponed to February 17 (the twenty-fourth day of the first lunar month). The actual resumption of production still needs to be based on the arrival of non-local employees. Adjustments are being made, and it is expected that the loom operating rate in various regions may gradually return to normal levels by the end of February.
We are worried about poor demand. Crude oil plummeted during the holidays, and the cost side dragged down the price of PX. It is very common for the polyester end to reduce production or delay start-up after the holidays. The terminal support is not good, and the price of raw materials is also unstable. It is expected that PX Prices are mainly falling, and it is expected to trend towards US$700/ton CFR China.
Based on the current concerns about economic recovery and poor demand prospects, as well as market participants’ concerns that public health incidents will continue to suppress crude oil demand, international oil prices hit a new low in nearly a year, and PTA costs and mentality continued to plummet; during the Spring Festival, PTA The start-up load basically maintains normal high-load operation, and the accumulated inventory in January is estimated to be around 400,000 tons; the seasonal off-season is superimposed on the impact of the disease, and the downstream polyester load has dropped to less than 70%, a year-on-year low, and the resumption of work has been delayed by 2-9 days. Demand If it is insufficient, we must also consider whether workers can arrive on time and whether downstream demand will continue to shrink. The industry is even worse.
Looking at the macro and supply and demand, under the dual pressure of increasing supply and weakening demand, the pressure on accumulated warehouses is expected to increase again. After the holiday, production lines with small capacity have been shut down. In the later stage, it is not ruled out that production lines below one million tons will be forced to operate. As the pressure continues to stop, the fundamentals of PTA spot prices in February cannot be said to be optimistic. It is estimated that the low price may hit 4,000 yuan/ton. At the same time, the overall atmosphere of commodities is not good, and the market mentality is cautious. The PTA spot market will be difficult to get rid of the weakness in the short term. , it is recommended to continue to maintain the short thinking in operation, continue to hold short orders before the holiday, and remember to avoid long orders during short-term highs during the day. (It is recommended to pay close attention to disease prevention and control trends)
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