Affected by changes in international macro market expectations, early inflation expectations caused commodities to rise too quickly, triggering market concerns about the Fed’s tightening of liquidity, causing the overall domestic commodity market to fall yesterday. Industrial products continued to adjust at a high level. Among them, chemical products and ferrous metals and other products that had experienced large gains in the early period fell significantly. Chemical products that were highly related to crude oil experienced larger declines.
A report released by the EIA on Wednesday night showed that U.S. crude oil inventories increased by 13.798 million barrels to 498.4 million barrels in the week ended March 5. U.S. domestic crude oil production increased by 900,000 barrels per day last week to 10.9 million barrels per day.
According to foreign media reports on March 10, there was heavy news at first that Russia would increase crude oil production by 890,000 barrels per day from May, which would exhaust all Russia’s crude oil production. Idle production capacity is essentially Russia’s withdrawal from the OPEC+ production reduction plan. Affected by this news, oil prices plunged nearly $1/barrel in the short term. However, Russian Energy Minister Novak’s original intention was not to increase production by 890,000 barrels per day from May, but to increase production in April by 890,000 barrels per day from the production level in May last year. Essentially, he didn’t say anything new. Oil prices then rebounded quickly to recover their losses, but some misinformation in the news led to violent fluctuations in oil prices last night.
On March 10, local time, the U.S. House of Representatives voted to pass the $1.9 trillion COVID-19 relief bill with 220 votes in favor and 211 votes against.
The decline in the polyester sector accelerated, and multiple PTA futures contracts fell to the limit
As the OPEC+ meeting continues production cuts After the news was confirmed, international crude oil began its upward journey in early March. U.S. oil and Brent oil hit new highs one after another, driving downstream chemical products to oscillate on the warmer side. However, the recent high level of crude oil has been blocked, and the continuous price correction has exerted a drag on the mentality of the chemical market.
After ethylene glycol led the decline on Tuesday, the polyester sector continued to fall sharply yesterday, and PTA futures even encountered multi-contract limits, and ethylene glycol futures fell again by nearly 6%. , short fiber futures closed down more than 5%, with the polyester sector leading the decline in the entire commodity futures. At the same time, stocks in the chemical sector also mainly fell yesterday, with stocks such as Hengyi Petrochemical and Yangmei Chemical falling slightly. In the opinion of industry insiders, this is not only related to the weak situation of the market itself, but also to a certain extent related to the correction of commodity prices in the chemical industry chain.
Since this week, the performance of polyester varieties has been weak, in sharp contrast to the strength after the holiday. The reason is mainly due to the cost side and There have been changes on the supply and demand side.
“On the one hand, the international oil price has changed from its previous strength and has experienced continuous adjustments recently with a large decline. The cost side of polyester continues to weaken; on the other hand, the terminal demand is weak. It has also had a certain negative impact on the polyester sector.” Zhu Lihang, an analyst at Zheshang Futures, told a reporter from Futures Daily that the price of polyester raw materials rose too high and too fast after the holiday. Terminal weaving factories were more resistant to the price increases of raw materials, and new orders from terminals were closed. It is relatively limited and gradually forms negative feedback to the upstream. The spot profits and disk profits of polyester staple fiber, which were most obviously affected by this, both fell sharply.
Overall, the main reason for the sharp decline in the polyester sector is still the sharp drop in cost-end oil prices. Affected by market sentiment, bulls have taken profits and left the market.
If Tuesday’s plunge in ethylene glycol was mainly driven by changes in expectations on the supply and demand side, yesterday’s PTA limit drop was mainly due to the weakening of the cost side.
As of March 10, the PX processing fee fell to 230 US dollars/ton, and the PTA spot processing fee fell below 300 yuan/ton. “Currently, the profits of all production links of PTA are compressed at a low level, making PTA highly correlated with crude oil. It is most obviously affected by oil price fluctuations. Once oil prices correct, PTA will be the first to bear the brunt of the decline.” Zhu Lihang said that due to this year’s The pressure on the supply side of PTA is too great, and it is difficult to make a big improvement in profits. The long-term logic of PTA still revolves around fluctuations in the cost side, and oil prices directly guide the trend of raw material PX.
“From a fundamental perspective, in March, PTA supply-side maintenance is expected to increase, and processing fees are in a low range.” Jiang Shuopeng, an analyst at Zhongda Futures, said that although the new device has begun production , but the overall short-term supply is still tight. The downstream polyester load has returned to more than 90%, and the profits of each product are relatively high. Polyester inventories have accumulated at low levels in the short term. At the same time, downstream production and sales have slowed down, and terminal raw material inventories are currently relatively high. “Overall, PTA supply and demand improved overall in March, and the basis is expected to remain strong. However, the short-term cost side is under downward pressure. At the same time, the expected commissioning of equipment in the future will still lead to increased supply pressure, and the pressure is still relatively high.”
Similarly, according to Everbright Futures analyst Zhou Ying, the current PTA processing fee is at a low level. Many PTA manufacturers have maintenance plans in March, and under the conditions of low processing fees, it is not ruled out that there will be more With the emergence of multiple overhauls, there will be a supply contraction of PTA in the short term.
As the polyester equipment for early maintenance has been started one after another, the polyester load has increased rapidly and has now risen to about 93%. The start-up of textured weaving has basically returned to the level before the Spring Festival, gray fabric inventory continues to decline, and the improvement in polyester demand also provides support for raw material prices. However, as the price of polyester products continues to rise, the resistance of terminal weaving has become increasingly apparent. The enthusiasm of terminals to replenish their positions has declined, and polyester production and sales have remained sluggish for many days.
“The short-term PTA supply and demand side is still benign, although the oil price has declined slightly.Data released by the National Bureau of Statistics on the 10th showed that China’s CPI fell by 0.2% year-on-year in February, which was expected to fall by 0.5%, and the previous value fell by 0.3%. In other words, although the current market expectations for inflation have weakened, the overall fact does not change the fact that inflation continues to exist.
From a fundamental perspective, the negative sentiment of excessive urea supply in the early stage has been basically released. “At the beginning of March, new facilities in Hubei Sanning and Jiujiang Xinlianxin were successfully put into operation and produced products, with a total production capacity of 1.32 million tons, adding pressure to the current excessive supply.” Zhang Linglu said that in order to ensure the use of fertilizer for spring plowing agriculture After being guaranteed, the operating rate of urea companies increased by nearly 20 percentage points in about a month, and the operating rate of Qitou companies increased by 46 percentage points in about a month. This led to a rapid recovery of market supply in the short term, and the supply period, current price and market Mentality brings greater pressure, and it has also become one of the main factors that caused the sharp correction in urea futures prices in the past two weeks.
The current domestic urea production level is still at a high year-on-year level, but the operating rate of enterprises has decreased compared with the previous year-on-year increase rate.
In terms of inventory, the inventory of urea companies experienced a seasonal inventory accumulation cycle before the Spring Festival, and also entered a seasonal inventory reduction channel after the Spring Festival. As of March 4, the total inventory of enterprises was 690,000 tons, a decrease of 5.74% month-on-month and a year-on-year decrease of 34.10%.
In terms of demand, downstream stocking and replenishment efforts have weakened since March. In the later period, the peak season for spring plowing and fertilizer use may enter, and downstream and grass-roots units are still in the process of constantly replenishing stocks and signing new orders. In addition, the operating rate of downstream compound fertilizer companies has increased to 48.78%, and the operating rate of the melamine industry has increased to 66.12%. The market still has good expectations for the subsequent increase in demand for the urea industry, and continues to provide strong support for urea futures prices.
In this regard, Guantong Futures analyst Yan Sensheng also said that the demand for urea in spring has not ended, and there will still be demand for corn fertilizer in the future. Downstream compound fertilizer and rubber sheet factories purchased less high-priced goods in the early stage. After the recent decline in urea, purchasing demand recovered accordingly. “Judging from the situation in previous years, the compound fertilizer operating rate is 47.96%, and there is still room for improvement in urea consumption. The decline in overseas markets is relatively small, limiting further declines in urea.” Yan Sensheng said that as the decline in urea spot prices slowed down this week, Urea futures experienced a phased rebound.
“On the whole, the current production level of urea market is high and is expected to continue to increase, but the upper space is very limited. At the same time, agricultural demand continues to follow up in the later period, and industrial demand Industries such as compound fertilizers, melamine, and sheet metal are also expected to further increase. In addition, the current market’s logical support for the increase in global crop sown area still exists, and expectations for the implementation of printed labels are also increasing over time. Strong.” Zhang Linglu said that the main focus in the later period is whether the current high supply pressure can be digested by demand expectations. The market in the later period is more in the supply and demand game stage, and the range of price fluctuations will continue to expand.
In Yan Sensheng’s view, the certainty that daily output will remain high will limit the rebound in urea prices. It is recommended that investors pay attention to the demand side, especially agricultural demand.
Similarly, the current supply of soda ash is also at a relatively high level. At present, the industry’s operating rate has remained at a high level of more than 80% for more than a month. As of March 10, the operating rate of the soda ash industry was 81.16%. Soda ash business inventories are also at high levels.
“It should be noted that most of the company’s inventory currently exists in the form of ready-to-ship. Some manufacturers are still implementing order closure measures, and due to restrictions on logistics and containers, companies cannot ship out goods. The volume is difficult to match the speed of orders, causing enterprises to accumulate inventory. However, the current tight supply of goods in the spot market continues to exist, especially light alkali.” Zhang Linglu said.
On the demand side, there are also better expectations. The price of flat glass has also continued to rise recently, and the operating rate of the glass industry has reached a high level of nearly 87%. The consumption of heavy alkali will be a sustained and high level of consumption.
“In the futures market, the premium of the soda ash futures 2109 contract to the 2105 contract continues to exist, and the premium has continued to expand since March, from 113 yuan/ton at the beginning of the month to Yesterday’s closing price was 144 yuan/ton.” Zhang Linglu explained that as the market has strong expectations for the photovoltaic glass production line to be put into operation in the second half of the year, the prospects for the release of soda ash demand are relatively optimistic. According to current statistics, most of the photovoltaic glass production lines put into operation in the second half of the year are concentrated in the third quarter, so the performance of the 2109 contract is even stronger.
On the whole, although the supply side of soda ash is under relatively high pressure (high operating conditions, high inventory, high water premiums), demand expectations are relatively good. It is understood that soda ash manufacturers still have plans to further raise prices next week, and corporate inventories are still expected to decline further.
In Zhang Linglu’s view, there is still room for upward growth in soda ash futures prices in the short term, but as futures prices continue to rise, risks continue to accumulate, and we need to be wary of the risk of falling from high levels in the later period.
On the whole, domestic energy and chemical products are more in response to the downward adjustment of crude oil, and the fundamentals of the industry have not changed much.
“In the short term, the trend of most chemical products will still be affected by the price of crude oil. On the one hand, it is related to the profit distribution pattern of the industrial chain; on the other hand, it is also because crude oil represents It reflects the strength of macro expectations, and the boost and ebb of macro preferences are the core factors affecting transactions in the near future.” Jia Ruibin said. </p
