As the contradiction between PTA supply and demand has intensified, and the continued accumulation of social inventory will also suppress future prices, PTA prices are expected to be weak before the Spring Festival holiday.
The picture shows the weekly operating rate of various polyester varieties (unit: %)
With the expansion of OPEC+ Due to the scale of production cuts and the conclusion of a phased economic and trade negotiation agreement between China and the United States, international oil prices maintained a strong trend in December, and PTA futures prices also continued to rise. The main contract rose to a maximum of 4,994 yuan/ton on December 17. Afterwards, PTA futures prices fell back amid expectations of new equipment being put into production and the expansion of the scope of polyester production cuts.
Device maintenance to hedge new production capacity
According to the original plan, in December, the 1.2 million tons/year installation of Zhongtai Petrochemical and Hengli Petrochemical (600346, Stock Bar) The 2.5 million tons/year unit of Line 4 has been put into operation. However, the commissioning time of these two units has been delayed, and the market’s concerns about increased supply have weakened. In terms of equipment maintenance, the 1.2 million tons/year unit of Hailun Petrochemical is scheduled to be overhauled in late December, and the 2.25 million tons/year unit of Yisheng Chemical Line 1 is planned to be overhauled from the end of December to mid-January next year.
From the perspective of time and scale, the equipment to be overhauled by Hailun Petrochemical and Yisheng Petrochemical basically corresponds to the equipment planned to be put into operation. The supply increase brought about by the commissioning of new equipment will be offset by the equipment overhaul. As of December 24, the daily operating rate of domestic PTA equipment was 93.47%, and PTA supply will remain stable in the short term.
Downstream demand is weakening
With the end of winter orders, the downstream polyester industry has gradually entered the off-season of demand, and the deterioration of production profits has forced polyester companies to start from November In the second half of the year, production reductions and suspensions began one after another; in December, the scope of polyester companies’ production reductions and suspensions continued to expand.
As of December 20, the production capacity of domestic polyester plants involved in the shutdown reached 4.7 million tons/year. The start-up of various polyester varieties has also begun to gradually decline. As of the week of December 19, the weekly operating rate of domestic polyester chips was 87.52%, an increase of 23.88% from the same period in 2018; the weekly operating rate of polyester staple fiber was 79.54%, a decrease of 0.86% from the same period in 2018; polyester filament yarn The weekly operating rate was 75%, down 4% from the same period in 2018.
At present, the scope of production reduction and shutdown of polyester plants will continue to expand. According to the current plan, there are still 6.66 million tons/year plants with production suspension arrangements in the later period. The production capacity of the plants that can resume production before the Spring Festival holiday is 1.31 million tons. /Year. Overall, after excluding the resumption of production equipment, the polyester production shutdown before the Spring Festival holiday involved a total production capacity of 9.35 million tons/year, accounting for 16.06% of the total production capacity at the end of 2019. As the scope of production reduction and shutdown expands, the start-up of various polyester varieties will further decline, and the demand for raw material PTA will also weaken.
Social inventory is at a high level in the past two years
Entering December, with the reduction of maintenance of PTA equipment and the expansion of the scope of reduction and shutdown of polyester equipment, PTA After two consecutive months of destocking since the National Day holiday, social inventory has begun to accumulate again. As of December 20, domestic PTA social inventory was 1.278 million tons, an increase of 11,000 tons month-on-month and an increase of 580,000 tons compared with the same period in 2018. The inventory is still at a high level in the past two years.
In summary, although the commissioning of Line 4 units of Zhongtai Petrochemical and Hengli Petrochemical has been delayed, and the maintenance of Hailun Petrochemical and Yisheng petrochemical units will to a certain extent offset the increase in supply brought about by the commissioning of new units, However, there are still plans to reduce and shut down a large number of downstream polyester units before the Spring Festival holiday. The start-up of various polyester varieties will also further decline, and the demand for the raw material PTA will weaken. With stable supply and weakening demand, PTA social inventory has once again entered accumulation mode, and the inventory will further increase in the future. </p
