From July 10th to July 24th, ethylene glycol rose by 7.2% in 14 trading days. Looking at the two varieties PTA and MEG together, from June 3 to July 10, the two varieties fell simultaneously, with a very consistent rhythm. But starting from July 10, the trends of the two varieties began to diverge. What happened to the market?
Cost-side support is still there, and poly Ester raw materials have bottomed out and are recovering
The main view of the recent crude oil market is that early trials of the new crown vaccine have achieved good results, and the continued bankruptcy of the US shale oil industry has also partially offset the market’s concerns about oversupply. Concerns and the oil market are supported by positive factors, and it is expected that international crude oil prices will still have a chance of rising in the short term. Under the strength of crude oil, the overall cost-side driving force of the petrochemical industry continues to be strong.
Same terminal demand, different inventory pressure
The current downstream market is in the traditional textile off-season. Terminal weaving orders are not yet clear, and both finished product and raw material inventories are at high levels. The enthusiasm for downstream procurement has decreased, and polyester cash flow has suffered losses. In the early stage, polyester companies began to reduce production and reduce burdens. However, the devices put into production in July include Fujian Baihong’s 250,000 tons of polyester chips, Hengyi Haining’s 25 Thousands of tons of polyester filament. The efficiency of polyester production that has been put into production in the first half of the year and that is expected to be new in the second half of the year is relatively obvious. The growth rate of production capacity is greater than the maintenance and load reduction efforts, so the polyester load has basically remained strong in a short period of time.
However, there are differences in inventory. In terms of PTA, device maintenance and restart and production are parallel, Hengli Petrochemical is put into production, and Fuhai Chuanghe Xinjiang Zhongtai equipment was inspected and restarted. The only company entering maintenance this month is Jiaxing Petrochemical. Therefore, the PTA supply side remained high in July. And driven by profits, the operating load of domestic PTA companies remains high, and the overall social inventory continues to grow. Currently, there is less spot circulation in the PTA market, and the current basis has strengthened in the mid- to late-term, and the overall market is in a weak situation; supply and demand and The basis difference continues to restrict the upside potential of PTA futures. The current PTA operating rate is 87.88%. The average operating rate in July is expected to be around 89%, and the output in July is around 4.32 million tons.
As for ethylene glycol, the supply-side margin has improved, the overall benign performance of SM and PE in the ethylene downstream industry chain and the EO price The high level of the domestic integrated device in the near future means that the output of compressed MEG is still the main one. Although the price of EO has dropped by 600 yuan/ton in the near future, the overall comparison shows that the superiority of economic benefits is still that of EG. It is incomparable; the overall operating load of coal-based MEG remains below 35%. In the short term, Rongxin has resumed work and Tianye has started commissioning, but the effective output shows that the marginal contribution rate to the supply side is still at a low level; the domestic MEG production forecast in July is Evaluate neutral.
As for the import side, the overall import side’s expectations have improved slightly driven by the news of Nanya’s maintenance reduction. However, the dock unloading and scheduling plan is still at full capacity before August. The delivery cycle is lengthening, and the duration of high inventory levels continues to extend. However, what needs to be noted in stages is that the recent rise in the water level of the Yangtze River has affected the unloading of some terminals to a certain extent, and the restrictions on tank capacity also affect the unloading speed of terminals. There is a small probability of inventory destocking in stages. The short-term marginal improvement gives the market a certain opportunity to take long action.
Polyester raw materials part ways? Maybe come back again!
The “one-up and one-off” situation of the two major raw materials in the upstream has brought about a boost to the “main force” polyester filament in the downstream? Or is there suppression?
In fact, in the recent period, as the weaving market gradually enters the off-season, and high inventory has become a common problem, the operating rate of looms has only declined but not increased, and the demand for raw polyester filament has gradually weakened. The production and sales of polyester yarns continue to be sluggish, and manufacturers frequently offer discounts and promotions, but weaving companies no longer foot the bill, resulting in the continuous accumulation of polyester yarn inventories. For downstream weaving manufacturers this year, the market is weak and gray fabric inventories are high, which has led to increased financial pressure on most manufacturers. Therefore, weaving manufacturers have become more cautious about stockpiling raw materials before the year. Judging from the current actual situation, whether it is its own fundamentals or downstream demand, the trend in the later period is bearish. In the later period, it will still be in a vicious cycle of production-slow sales-accumulation of inventory-commissioning.
At the same time, polyester raw materials MEG and PTA have always been closely related. Even if the price difference widens, the market trend will most likely remain the same, but judging from the performance of MEG after entering 2020 Not only must the market remain consistent, but the development direction of subsequent industries is also expected to follow the same trend. At present, the short-term marginal improvement of ethylene glycol has given the market a certain opportunity to do long, but it still needs time to verify whether later supply maintenance can be implemented and whether downstream terminal market orders can return smoothly. </p
