Crude oil prices have suddenly become strong recently, with Brent crude oil reaching a high of US$70 per barrel, with an increase of 36.3% since the beginning of the year. The PTA market is also extremely hot. What is hot this time is not only the market price, but also the rush to announce maintenance of PTA factory equipment.
Mainstream PTA suppliers reduce June contract supply
An additional 5.2 million tons of maintenance plans will be added from June to July
Spurred by the recent news that mainstream manufacturers have reduced contract volumes in June, the spot price of PTA futures has increased After rebounding, spot processing fees have been restored to nearly 600 yuan, and major manufacturers have turned around losses.
It is understood that an additional 5.2 million tons of maintenance plans will be added from June to July. The 650,000-ton unit of Yisheng Ningbo will be inspected from May 21, and the other unit of 2.2 million tons will be inspected and restarted on May 29, to be determined. Liwan Polyester’s 700,000 tons will be inspected for one month starting from May 13, Fuhai Chuang’s 4.5 million tons will be reduced to 70-80% from May 20, Hanbang Petrochemical’s 2.2 million tons, Shanghai Petrochemical’s 400,000 tons, Reignwood Petrochemical’s The 1.4 million tons, Wu Petrochemical’s 90,000 tons, and Yangzi Petrochemical’s 650,000 tons units are to be restarted during maintenance. The 700,000 tons of Yadong Petrochemical plans to undergo an eight-day maintenance in early June.
Mainstream PTA suppliers have also reduced the supply of contract goods in June and announced some maintenance plans, such as Hengli Petrochemical 5# 2.5 million tons and Honggang Petrochemical 1.5 million tons. Maintenance is planned in early June, and Taiwan Chemical Ningbo 1.2 million tons is planned to be overhauled in early July.
On the other hand, Zhejiang Petrochemical’s 1# 2.5 million-ton PX new device and Yisheng New Materials’ 3.5-million-ton PTA new device were originally planned to be put into operation at the end of May, but are now slightly delayed. The impact of production capacity on the market is delayed. The 3.3 million tons of Yisheng New Materials is planned to be tested from May to June, and the specific production time is slightly delayed.
As major PTA manufacturers continue to reduce supply in the June contract, coupled with the unexpected failure of Yisheng Ningbo 4# at the end of the month, the domestic PTA load is 83.2%, a month-on-month decrease of 0.6 percentage points. The supply of circulating goods is tight, supporting a strong basis. As the processing range continues to improve, it has reached the second highest level in the year. All in all, the recent rise in PTA has been driven by the cost side and the market has been boosted by the shutdown and maintenance of installations. So, with the news about installations and maintenance in the later stage, can PTA continue to rise?
Uncertainty increases and oil price fluctuations will intensify
U.S. economic data is strong, EIA crude oil and refined oil inventories have fallen more than expected, crude oil inventories in the Cushing region have dropped to the lowest since March 2020, and refinery capacity utilization has increased to pre-epidemic levels, coupled with summer travel As the peak approaches, epidemic restrictions are gradually relaxed, and crude oil demand growth accelerates, forming strong support for oil prices. The fifth round of Iran’s nuclear negotiations has begun. Once the Iran nuclear agreement is reached, Iran may supply an additional approximately 1 million to 2 million barrels per day, which may suppress the upside of oil prices. The market estimates that OPEC+ may adopt a plan to increase production by 840,000 barrels per day in July at the June 1 meeting. It is expected that a cumulative production increase of 2.1 million barrels per day will be cautious in July. However, since there is still uncertainty about the return time of Iranian crude oil, later decisions will be affected to a certain extent. Oil prices are expected to fluctuate at high levels in the short term. Brent oil is paying attention to the pressure of the 70 mark, the Iranian nuclear negotiations, the OPEC+ meeting and the epidemic situation.
Weaving end: production restrictions, epidemics, power cuts
It may force more polyester factories to reduce production!
In the context of large-scale upstream production, polyester filament has made obvious profits. Since March, filament yarn profits have performed outstandingly in the entire industry chain. However, due to insufficient downstream orders, it is difficult for manufacturers to realize profits. Recently, the downstream polyester load has gradually recovered after a short period of reduction. The polyester load is 89.6%, an increase of 0.7 percentage points month-on-month; the loom load in Jiangsu and Zhejiang is 74%, a month-on-month decrease of 4.4 percentage points. The performance of terminal orders deviated, the load of looms declined seasonally, and polyester price reduction promotions were carried out at the end of the month. Production and sales have rebounded, but the sustainability is not good, and polyester product inventories continue to increase. Recently, filament manufacturers have launched price reductions and promotions many times to alleviate the pressure of high inventory. At present, POY inventory is about 14 days, FDY is 24-25 days, and DTY is 25-26 days.
The profit of staple fiber is far less than that of filament. After the Spring Festival, the processing fee drops significantly. The downstream yarn mills usually promote at low prices. Recently, short fiber inventory has turned from negative to positive and continues to accumulate. At the end of May, short fiber cash flow entered a loss, and manufacturers began to reduce production to increase prices. It is understood that many devices have recently joined the maintenance ranks, and it is expected that spot processing fees will improve in the future.
From the weaving side, the Shengze area has recently begun to restrict production, and small and medium-sized enterprises in many areas of South China have also been affected by the power restriction policy. At the same time, since May 21, the new crown epidemic broke out in Guangdong, and the province’s prevention and control level has been comprehensively improved. The textile markets in Guangzhou, Foshan, Zhongshan and other places have been affected to varying degrees. The operating load of loom factories is facing a decline, which may force more polyester factories to reduce production, which is not conducive to raw material consumption.
In general, the current main driving force for polyester is not demand, but the rising costs caused by rising crude oil and the emotions brought about by the general rise effect. Overlay. However, most of the good news about crude oil has been released, and subsequent gains are more likely to narrow. The demand for downstream polyester is light, and terminal demand is expected to recover, but there is currently no substantial benefit. The reduction in contract supply of giants has alleviated the current huge supply pressure of PTA to a certain extent and boosted the market price of PTA. However, in the context of high processing fees and high profits, production companies are not willing to perform maintenance. It is expected that PTA willTreasury strength may weaken.
</p
