It is difficult to significantly improve the epidemic recovery and vaccine popularization progress in the first quarter. The foundation for crude oil prices to continue to rise in the short term is not solid. In addition, the contradiction between PTA supply and demand may intensify. In terms of operation, long orders in the PTA2105 contract can leave the market at a high level.
The picture shows OPEC’s monthly crude oil production (unit: thousand barrels/day)
Recently, PTA2105 The contract rose to a maximum of 4,094 yuan/ton from 3,328 yuan/ton in early November last year. During the same period, the spot price climbed from 3,100 yuan/ton to 3,840 yuan/ton. The strength of the PTA market is mainly driven by the cost side. Regarding the market outlook, the author’s analysis is as follows:
The crude oil market is weak in the near term and strong in the far term
Reuters According to a social media survey, in December last year, the daily crude oil production of the 13 OPEC member countries was 25.59 million barrels, an increase of 280,000 barrels from the daily production in January of that year. In addition, in December last year, the daily crude oil production of Iraq, including the semi-autonomous region of Kurdistan, was 3.857 million barrels, a month-on-month increase of 4.7%. According to the agreement between OPEC and its production reduction alliance, Iraq’s daily crude oil production quota was 3.804 million barrels in December last year and 3.857 million barrels in January this year. However, recently, OPEC+ reached an agreement on short-term crude oil production. Russia will increase production by 65,000 barrels per day in February and March, and Kazakhstan will increase production by 10,000 barrels per day in February and March. However, Saudi Arabia voluntarily cut production by an additional 1 million barrels per day in February and March. Since February 1, Saudi crude oil production has dropped to 8.125 million barrels per day. Except for Saudi Arabia, Russia and Kazakhstan, other OPEC+ oil-producing countries maintain their oil production policies unchanged. Overall, OPEC+ not only failed to increase production, but relied on Saudi Arabia’s voluntary production cuts to substantially increase production cuts.
The picture shows the weekly crude oil production in the United States over the years (unit: thousand barrels/day)
Latest Data showed that U.S. crude oil production averaged 11 million barrels per day, the same as the previous week, but 1.9 million barrels less than the same period last year. The EIA predicts that U.S. crude oil production will remain at 11 million barrels per day for at least a year as production from existing wells in shale fields declines faster than production from new drilling increases. In addition, data from Baker Hughes showed that the number of oil wells drilled online in the United States was 287 in the week ended January 15, an increase of 12 from the previous week.
As of January 19, Beijing time, there were 95.94 million confirmed cases of COVID-19 and 2.04 million deaths worldwide; 530,000 new confirmed cases and 530,000 new deaths were reported worldwide in a single day 9349. Recently, various European countries have intensified their blockades. The nationwide blockade in the UK will last until at least mid-February. This blockade requires people to work and study from home, and is prohibited from leaving the area where they are. They can only go shopping for basic needs. In addition, the blockade in Germany, Europe’s largest economy, will last until at least January 31, and the blockade in the Netherlands will last until at least February 9. Data show that under strict blockade measures, road utilization in the UK, France, Italy and Spain is at its lowest level since June last year, a 37% drop compared with before the epidemic. OPEC said in its monthly crude oil market report for January that restrictions and lockdowns had a negative impact on European oil demand late last year and continued to weigh on consumption in the first quarter of this year. In addition, judging from the vaccination situation, only Israel has vaccinated 15% of the total population, while other countries have lower vaccination rates. It can be said that demand in the first quarter was more pessimistic than previously expected by the market.
Although Russia and other countries are still hungry for market share, OPEC has adopted a demand-focused production restriction strategy, which has gained support for the market. Considering that the progress of the epidemic and vaccine popularization is difficult to improve in the first quarter, the market’s start-up time is mismatched with the actual improvement time. If you bet on long-term low-level long positions that the epidemic will eventually pass, you can continue to hold them. In phased market conditions, we should beware of inconsistencies between expectations and facts.
Equipment maintenance supports the widening of the price difference between PX and naphtha
As of January 15, The central spot price of PX’s CFR in Taiwan was US$691/ton, and the average price during the week was US$690.5/ton, an increase of US$11.9/ton from the previous week. In addition, as of the week of January 8, the domestic PX device operating rate was 76.6%, and the Asian PX device operating rate was 76.7%. Among them, Jinling Petrochemical’s 700,000 tons/year unit was reduced to 70% on January 15; Ningbo CICC’s 1.6 million tons/year unit began maintenance on November 26 last year for a period of two months. It is scheduled to be completed in January this year. It restarted on the 26th; Fuhua’s 800,000 tons/year device was overhauled from December 18 last year to January 25 this year; Pengzhou Petrochemical’s 750,000 tons/year device was restarted on January 10; Urumqi’s production capacity is 1.07 million tons/year. The annual load of the device has been increased to 70%; the load of Qingdao Lidong’s device has been increased to 90%; Sinochem Quanzhou’s 800,000 tons/year device was put into operation on December 28 last year, and the load will be gradually increased in the later period. In addition, Japan’s Idemitsu plant with a production capacity of 270,000 tons/year was shut down in late December last year; JX Oita’s plant with a production capacity of 420,000 tons/year has no plans to restart; Nippon Oil Chita’s plant with a production capacity of 400,000 tons/year plans to shut down in October ; Singapore’s ExxonMobil’s 450,000 tons/year unit was shut down in early June last year, and there is currently no clear resumption time; the Middle East’s PetroRabigh’s 1.34 million tons/year unit is scheduled for maintenance in February.
Because of CICCThe level of maintenance of domestic PX equipment cannot be ignored, so that from November to December last year, the PX market destocked a total of 350,000 tons. As a liquid chemical, PX is particularly sensitive to changes in inventory. Supported by this, the price difference between PX and naphtha widened to US$180/ton. The level of maintenance in the second quarter of this year will be larger. It is expected that the PX market will continue to destock before the second phase of the PX unit of Zhejiang Petrochemical is put into operation, which will inevitably support the further widening of the price difference between PX and naphtha.
The overall PTA inventory is still at a high level
Jialong Petrochemical, Tianjin Petrochemical, Pengwei Petrochemical, The PTA units of Hanbang Petrochemical No. 1 and Yangzi Petrochemical are in long-term parking status and will most likely be eliminated by the market in the future. Dalian Yisheng’s 2.25 million tons/year device is operating at half capacity and is expected to resume production in the near future; Sichuan Shengda’s 1 million tons/year device plans to restart on February 20; Fuhai Chuang’s 4.5 million tons/year device is planned It will restart on January 22; Hanbang Petrochemical’s No. 2 unit with a capacity of 2.2 million tons/year will be shut down for maintenance on January 6, and the restart time is to be determined; Yisheng Hainan’s unit with a capacity of 2 million tons/year was originally scheduled for maintenance in January, but it is now postponed to March. In terms of new production capacity, Fujian Baihong’s 2.5 million tons/year device that was originally planned to be put into production last year was postponed to January or even February this year.
Recently, the operating rate of domestic PTA devices is 81.20%. In the later period, with the gradual resumption of maintenance devices and the gradual commissioning of new devices, the supply pressure on the PTA market is still high.
The picture shows the PTA device operating rate (unit: %)
This week’s PTA futures warehouse receipts Inventories continued to rise, while PTA social inventories fell slightly. As of January 15, PTA futures warehouse receipt inventory was 1.8126 million tons, an increase of 62,800 tons from January 8, and an increase of 1.6446 million tons from the same period last year; PTA social inventory was 3.89 million tons, a decrease of 35,000 tons from January 8. tons, an increase of 2.336 million tons compared with the same period last year. Overall, PTA market inventory is still at a high level.
The seasonal burden reduction of polyester factories is clear
At present, the performance of various indicators in the polyester link Good. Except for FDY, the inventory and cash flow of other polyester filament varieties have returned to normal levels in previous years. The POY inventory index is at 6.6 days. The current market is paying more attention to the maintenance of polyester factory equipment and the holidays of workers in the terminal textile and garment industry. It is understood that most workers return home in mid-to-late January. Judging from the announced polyester factory maintenance plan, most filament and Jiangsu and Zhejiang short fiber factories plan to start maintenance in mid-to-late January. Therefore, the seasonal load reduction on the polyester end is clear. If Baihong’s new device with a production capacity of 2.5 million tons/year is put into operation as scheduled, the risk of accumulation of inventory in the PTA market will further increase.
At present, the operating rate of looms in Jiangsu and Zhejiang is 79%, which is slightly lower than the previous period. However, there are no signs of continued improvement in orders, and gray fabric inventory remains at a high level. From January to November last year, the cumulative growth rate of exports of clothing and clothing accessories was -7.2%, and the growth rate of clothing retail sales was -9.4%. The absolute figures of clothing consumption are low.
Trading Strategy
The positive factor for the recent rise in PTA prices is the rise in crude oil prices. If you bet in the crude oil market that the epidemic will pass and demand will be released, you can go long. However, the phased increase is a bit too reluctant, because the progress of epidemic recovery and vaccine popularization is difficult to change in the first quarter, and the market start-up time is mismatched with the actual improvement time. We must beware of inconsistencies between expectations and facts. The support for the crude oil operation center to continue to rise in the short term is not very solid, and the contradiction between PTA supply and demand may intensify. Therefore, it is recommended that long orders in the PTA2105 contract leave the market on highs. </p
