Market Profile
Opinion Strategy
As of now, the overseas epidemic has not seen a clear turning point, and the impact on the industrial chain still exists. Crude oil prices fluctuated violently last week, with the WTI May contract once experiencing negative oil prices, and the main PTA contract rebounding after hitting a new low of 3,128. The number of PTA warehouse receipts continues to increase rapidly. Last Friday, the Zhengzhou Commodity Exchange approved the construction and distribution of two temporary storage locations in Jiaxing and Zhangjiagang Free Trade Zone. According to the news, the storage capacity was booked quickly, and the spot discount obviously continued to decline. However, while the inventory is high, although the PTA processing fee has been slightly adjusted back to around 620 yuan/ton at the end of last week, the profit is still acceptable. In the short term, there is insufficient power to overhaul the equipment. Recently, only the 2 million tons unit of Yisheng Ningbo was temporarily stopped for 4 days. .
The start-up of ethylene glycol has further declined. Coal-based ethylene glycol has poor profits due to its high cost, and the overall start-up remains at a low level. Ethylene glycol stocks have declined, but are still at a relatively high level. Downstream demand has not yet been repaired, making it difficult for prices to rise significantly.
The comprehensive start-up load of looms in downstream Jiangsu and Zhejiang has dropped to around 48%. The May Day holiday is approaching, and some companies have plans to reduce load and take vacations. It is expected that the May Day start-up rate will drop to the lowest point of less than 40% . Polyester major products are back in the tired inventory channel. Driven by the demand for masks and protective clothing, the use of non-woven fabrics and some cloths has surged, but the overall proportion of polyester demand is small. In particular, major European and American countries have not shown signs of resuming production and work due to the epidemic, and it will be difficult to make up for the textile and clothing demand in a short period of time. Category demand declines in usage. The demand gap and high inventory still require equipment production reduction to be completed. Inventory pressure and demand gaps are still there, and polyester raw materials remain low.
Strategic suggestions
Put short positions on PTA and EG when prices rise; short PTA and long MEG arbitrage. (For reference only)
Main risk points
1. The progress of the epidemic has triggered a sharp decline in downstream demand, which will compress raw material profits upward.
2. OPEC+’s ineffective implementation of production cuts has triggered a further collapse of the center of gravity of crude oil prices.
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