The outbreak of the new coronavirus epidemic in early 2020 shattered original market expectations. Affected by the novel coronavirus pneumonia epidemic, commodity futures in the Chinese market, which opened on February 3, were almost all green, and most ended at the limit. In the future, the downstream weaving and terminal markets are still waiting for the resumption of work plan, which may be delayed again. The polyester market has been hit by the double blow of international market fluctuations and stagnant downstream demand. How will polyester raw materials perform?
The resumption of weaving work in Jiangsu and Zhejiang is further postponed: Keqiao government requires February 17, Shengze General Chamber of Commerce recommends February 14 !
Due to the uncertainty of the development of the epidemic, Shaoxing Keqiao Prevention and Control Leading Group issued a notice that the start of construction will be postponed until after February 17.
In another textile cluster, Shengze, its General Chamber of Commerce also issued an initiative to postpone the resumption of work today. The letter calls on members of the chamber of commerce to resume work after February 14. It is understood that Shengze is the largest weaving base for woven products in China and currently has about 100,000 advanced weaving equipment.
High-load polyester production: inventory pressure surges, and later production may be adjusted depending on the situation
On the other hand, the current polyester raw material equipment maintains high load operation and is still increasing.
The fundamentals of the PTA industry continue to weaken. From the supply side, the PTA operating rate before the holiday was 89.48%. On January 27, as the 2.25 million tons/year unit of Yisheng Lian was restarted, the 1.4 million tons/year unit of Reignwood Petrochemical began maintenance (the planned maintenance lasted for one month), and the 650,000 tons unit of Yisheng Ningbo entered maintenance, and the restart time is to be determined. The operating rate rose to 90.16%, an increase of 0.68 percentage points from before the holiday. The production shutdown in January involved a total production capacity of 4.9075 million tons, and the supply loss that month was approximately 600,000 tons.
Chart 1 PTA device maintenance trends
And from ethylene glycol From a market perspective, based on current operating conditions of in-production devices and new device commissioning progress and plans, domestic ethylene glycol production is expected to reach 2.28 million tons in the first quarter, but the demand side is relatively weak. In January-February, polyester factories There will be concentrated shutdowns for maintenance, so polyester production will experience a periodic decline.
On the supply side, driven by the restart of Henan Energy’s Luoyang unit, the current operating rate of ethylene glycol plants has increased compared with before the holiday, and the industry’s overall operating load is 72.46%; of which The operating load of the integrated device was 68.85%, which was stable compared with before the holiday. The operating load of the coal-to-ethylene glycol device was 77.14%, which was 3.02% higher than before the holiday. Due to recent logistics restrictions, some factories have reported that factory inventory pressure has increased slightly, and the subsequent start of production may be adjusted depending on the situation.
Chart 2 MEG device maintenance trends
Affected by the epidemic during the Spring Festival, market sentiment Pessimism has intensified. Combined with the sharp decline in international oil prices since mid-January, it is expected that the prices of major petrochemical products will be significantly under pressure under dual macro and cost pressures. At the same time, affected by the epidemic, the start-up of polyester plants after the holidays is generally delayed. In the short term, downstream operations are expected to continue to operate at low load, and the demand side will shrink significantly. Domestic existing PTA and MEG equipment operated smoothly during the Spring Festival, and most companies’ product inventories increased. Combined with the accumulation of cargo supply caused by port holidays, PTA and MEG may face significant inventory pressure from February to March.
Due to the unoptimistic forecast of terminal loom operation rates, the demand for polyester products may be further delayed, resulting in a later-than-expected increase in polyester operating rates. The price of polyester products may fall significantly. The polyester operating rate calculated last week was 77.7%, and the operating rate during the Spring Festival holiday should be below 75%. The divergence between the supply side and the demand side will increase the contradiction between supply and demand, leading to an unexpected accumulation of polyester inventories. High inventories may force some small and medium-sized raw material factories to reduce their load and production.
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