Affected by low processing fees and cost-end support, PTA will rebound in the near future. However, considering the overall oversupply pattern, it is expected that the time and magnitude of PTA’s rebound will be limited.
Affected by the sharp rise in international crude oil prices, PTA futures rebounded last week. Technically, after the main 2001 contract price of PTA futures fell below the strong support of 4,950 yuan/ton, it did not effectively fall below the 4,650 yuan/ton support in the past three and a half years. The recent price may test the 4,950 yuan/ton pressure level.
Processing fees are at a low level
Affected by the Sino-US trade friction , domestic textile demand performed poorly this year. As market uncertainty is higher than in previous years, most end-use textile companies prepare goods based on orders and are not willing to actively stock up. Since terminals are not active in purchasing raw materials, the demand for chemical fiber has been greatly affected, which has made PTA consumption weak. According to statistics, as of November 21, the average annual operating load of domestic PTAs was 83.73%, an increase of 0.79 percentage points from last year’s average. As the supply of PTA manufacturers remains high, and the units of Sichuan Shengda, Xinfengming, Hengli Phase 4, and Zhongtai Chemical have been put into operation, the market supply pressure continues to increase. Under the influence of oversupply, PTA futures prices continue to decline.
However, as the price of PTA continues to decline, the operating conditions of PTA manufacturers are also deteriorating. At present, the processing fee of the domestic PTA industry has fallen to a low of 500 yuan/ton, and the industry average loss is 60 yuan/ton. In this case, the production enthusiasm of PTA companies has declined. In mid-November, Pengwei Petrochemical’s 900,000-ton production capacity, Ningbo Taihua’s 1.2 million-ton production capacity, Yadong Petrochemical’s 750,000-ton production capacity, and Jiaxing Petrochemical’s 1.5 million-ton production capacity will be overhauled, but the maintenance period will not be long. It is expected that except for Pengwei Petrochemical , will resume production one after another this month.
The role of cost support appears
At present, PTA processing fees are at a low level Under the circumstances, the supporting role of cost for PTA will gradually appear. On the premise that the cost center of gravity does not shift downward, PTA prices will be relatively resistant to falling, and the downside space will be small. From a cost perspective, as OPEC will hold a ministerial meeting in early December, the market expects OPEC to introduce a more aggressive production reduction policy. In addition, the number of active drilling rigs in the United States continues to decline, inventory growth is less than expected, and heating oil consumption enters the peak season. Crude oil prices will remain relatively strong.
Due to rising costs, the price of upstream PX has been relatively strong. The FOB price in South Korea has stabilized at around US$763/ton, so the cost side of PTA is more likely to stabilize or rise slightly in the later period. Based on this judgment, if PTA prices stabilize or fall, the company’s processing fees will be further compressed and losses will further expand, which will force the company to stop or limit production to protect prices. The author therefore believes that considering the low processing fees and relatively stable costs, PTA’s disk price may rebound to repair the current too low processing fees. Not only that, the recent trend of PTA futures has been weaker than that of spot goods, the basis spread has expanded, and registered warehouse receipts have dropped significantly. As warehouse receipts fell and some basis trading positions were closed, the selling pressure weakened.
The picture shows the PTA basis and warehouse receipt volume
Market trading is relatively light
In the next 2-3 years, many large refining and chemical units will be put into operation in China, and PTA production capacity will enter A new period of rapid growth. At the same time, the Sino-US trade friction that had eased in the early stage has recurred recently. Considering the long-term nature of the Sino-US trade friction and the early demand for export overdrafts, clothing exports in the later period are still not optimistic. Under such a general background, it is difficult for PTA to change its weak situation.
In the short term, the polyester production load will be stable next week, and no new maintenance plans will be announced. However, judging from the market trading situation, the transactions of short fiber and bottle flakes are very high. Sluggish, considering that the winter clothing consumer stocking market has ended, it is inevitable that PTA demand will be weak.
Based on the above analysis, the continued decline in PTA prices has led to continuous compression of processing fees. At the same time, because the cost side does not have the ability to fall significantly, Possibly, so there is limited room for further downside in PTA prices, and there may be a rebound triggered by repair and processing fees in the near future. However, in the long term, as PTA production capacity enters its peak period, the oversupply pattern continues to worsen, and short-term demand enters the off-season and it is difficult to provide impetus for price increases. Therefore, the time and magnitude of this round of PTA rebound are limited, and it is recommended to test short every rebound. </p
