The negative outlook
Since March, under the pessimistic expectations of poor demand, PTA futures have been carrying a heavy load, and the crude oil price war has accelerated its pace of decline. The main contract of PTA futures has continued to hit new highs. A record low. The author believes that the PTA market, which is deeply affected by cost suppression and supply-demand imbalance, is extremely weak, and the market outlook will continue to find a bottom.
Reduced raw material costs
Although the Federal Reserve has introduced economic stimulus policies many times, international oil prices are still weak and difficult to change. Since the beginning of March, the cumulative decline in international oil prices has reached as much as 50%, entering the low range of US$20-30/barrel. At the same time, the downstream chemical market is also bleak. At present, Asian PX has fallen below US$500/ton, down US$250/ton from the same period last month.
With the sharp fall in oil prices, the PX-naphtha price difference has recently risen to around US$300/ton, but the market is still hardly improving. At the beginning of the year, Zhejiang Petrochemical’s 2 million tons new device was put into operation. In addition to the multiple domestic devices that increased production last year, the supply of PX has reached a new level. Since PX is mostly an integrated device, the impact of the epidemic on manufacturers’ production is limited. A total of 1.8 million tons of new production capacity is expected to be released in the second half of the year, and the supply of PX is still abundant. The decline in PX prices has reduced the production cost of PTA, making it difficult to form effective support for PTA.
Supply pressure is still there
From January to February, in the context of imbalance between supply and demand, although some PTA manufacturers reduced their load, many of them were involved. It is a small and medium-sized device with a capacity of less than 2 million tons and has limited impact on the total market supply. In the first two months of this year, the PTA market accumulated a total of 1.5 million tons. As Hengli Petrochemical (600346), Fuhai Chuang, Zhuhai BP and Xinfengming (603225) successively stopped for maintenance in mid-March, the PTA operating rate dropped to 69%, and the market accumulation rate began to slow down.
However, the decline in the downstream market of the PTA industry chain was weaker than that in the upstream link. Therefore, as raw material prices fell, the average processing fee for PTA spot prices increased to 588 yuan/ton in March, an average increase of 160 yuan/ton from February. In other words, although the current absolute price of PTA is at a historical low, spot processing profits are better than in the previous period. Under this situation, it is unlikely that manufacturers will continue to reduce production in the future. As these maintenance devices gradually restart at the end of March, PTA operating rates will increase again, and it will be difficult to rely on supply-side contraction to adjust inventory pressure.
Demand is still sluggish
Since March, as terminal companies have accelerated their resumption of work, polyester factories have gradually restarted their parking capacity. The average operating rate of ester manufacturers has reached 80%, but there is still a certain gap compared to the annual average operating rate of about 88% in 2018 and 2019.
Recently, after a short two-week decline, polyester polyester stocks have risen again. The current stocks of filament POY, FDY and DTY are 28.5 days, 27.5 days and 37.5 days respectively, which is close to the end of February. Inventory peak. However, the operating load of downstream terminal enterprises is less than 70%. Insufficient production and sales will lead to further increases in polyester inventories in the later period, thus dragging down the further increase in operating operations of polyester manufacturers. At present, the overseas epidemic is still serious, and a decline in external demand in the second quarter is inevitable. However, the country is in a period of recovery, and if export pressure shifts to the domestic market, demand growth pressure will be more obvious in the later period.
In short, under the pessimistic expectations of increasing supply and demand contradictions, the PTA market is facing the pressure of falling costs. It is difficult to find benefits in the industrial chain, and futures prices will continue to bottom out. </p
