On December 6, local time, after a two-day production reduction meeting in Vienna, Austria, the OPEC+ organization, composed of the Organization of the Petroleum Exporting Countries (OPEC) and Russia and other oil-producing countries, reached a new production reduction agreement. OPEC+ decided to increase production cuts from 1.2 million barrels per day to 1.7 million barrels per day by the end of March 2020. Surprisingly, Saudi Energy Minister Abdul Aziz also stated that he will further significantly reduce production based on the production cuts agreed by OPEC+, and will reduce production by an additional 400,000 barrels per day on the basis of the production reduction quota. This will This means that OPEC+’s total production cuts will reach 2.1 million barrels per day, and Saudi Arabia’s production will be the lowest level since 2014 in terms of sustainability. OPEC+’s final actual production reduction will reach 2.1 million barrels per day, which is equivalent to 2.1% of the current total global crude oil demand.
Under the support of the crude oil cost side, in the near future Polyester raw materials also rebounded. Affected by the new commissioning of equipment, PTA has shown a weak operating trend overall this year. Since the first-phase PTA device of Xinfengming Dushan Energy was put into operation in October, the PTA processing range has been fluctuating and declining, once falling below 400 yuan/ton. Although there is still a small profit for some new devices, the overall profit level has shrunk significantly compared with before. The current mainstream transaction price in the PTA market closed at 4,830 yuan/ton. From the perspective of the entire polyester industry, the total polyester production start-up has recently fallen to 86.42% due to the impact of Hengsheng maintenance, Yuanfang restart, Xinfengming maintenance, etc. Although more maintenance is expected in December, the current polyester production start-up is still slightly higher than the same period last year, up 2.98 percentage points from the same period last year. Therefore, from the perspective of polyester’s demand for raw materials, it is indeed supported in the short term.
Since November, polyester terminal weaving and texturing have been stopped one after another, especially in the weaving process. There have been more parking in some areas; and the polyester link has also successively released Maintenance and production reduction plans before and after the Spring Festival.
Terminals will accelerate parking in late December. The overall high gray fabric inventory in the fourth quarter has made the cash flow of weaving factories slightly tight. As the Spring Festival approaches, many weaving factories need to ship goods to collect funds. On the one hand, they must pay wages, and on the other hand, they must pay for raw materials and prepare new raw materials. It is difficult to ship, especially water-jet gray fabrics, and funds are tight. Coupled with the weak judgment on the overall raw material and product prices last year, the production enthusiasm last year was relatively low. Therefore, feedback from the current parking of terminal looms It seems that the Spring Festival holiday of looms has been advanced this year. So far, the operating rate of looms in Jiangsu and Zhejiang has dropped to around 62%, and is expected to drop to around 40-50% by the end of December. The average monthly operating rate in December is expected to drop to around 55%.
The current inventory pressure on polyester factories is limited, but profit levels are not optimistic. Both POY and FDY have entered losses. Many polyester factory maintenance and production reduction plans have been introduced before and after the Spring Festival. Some factories have added new maintenance volume in addition to the original maintenance plan, such as Tiansheng, Dawo, etc. The polyester factory’s concentrated production reduction and shutdown from December to January was about 9.5 million tons/year. Among them, after some maintenance and production reduction in early December, the amount of maintenance in the middle of the month was relatively small, but from late December to mid-January, it was the most concentrated time period for maintenance and production reduction. It is expected that the low polyester load will appear in mid-January, around 75%. At present, in the polyester maintenance forecast, polyester yarn POY has the highest cumulative proportion, while FDY has relatively low production due to the original start-up. Therefore, further production reductions and shutdowns are limited.
To sum up, the short-term supply of PTA is subject to factory maintenance and control, and the overall market supply is acceptable. However, with the implementation of the polyester factory equipment maintenance plan, polyester The overall support for the demand side of ester is insufficient. Considering that Hengli Phase IV’s 2.5 million tons and Xinjiang Zhongtai’s 1.2 million tons new equipment will be put into operation at the end of this month, PTA will most likely remain in weak operation before the Spring Festival. In the later stage, we must focus on the macroeconomic situation and international crude oil price trends. </p
