Crude oil plummeted, market sentiment was frustrated, PTA fundamentals were not favorable, and futures prices hit new lows. Recently, there has been a serious surplus of global crude oil, with delivery approaching, tank capacity tight, and external crude oil plummeting, suppressing sentiment in the Nenghua sector.
As far as PTA is concerned, its fundamentals are not favorable, but on the supply side, processing fees are high. , PTA operating rate climbed to 93%, and supply is at a high level. From the demand side, although the downstream polyester operating rate has increased to 84%, terminal weaving orders have not yet recovered, and with the May Day holiday approaching, some weaving companies have plans to stop work early for the holiday, and the loom operating rate has dropped to 49%. Terminal demand is not good, and the increase in polyester operating rate is limited.
The spot market transactions were sporadic, and the factory operating load remained at a high level of more than 92%. In terms of equipment, Ningbo Yisheng’s 2 million tons PTA equipment was temporarily stopped and planned to be stopped for 4 days. Shanghai Jinshan Petrochemical’s PTA unit with an annual output of 400,000 tons plans to shut down for maintenance from May 6, and the maintenance is planned to last 28 days. The current market inventory is above 3 million tons, and supply pressure is still high.
The crude oil market is affected by supply and demand pressures, with insufficient remaining storage capacity and prices continuing to fall. The closing prices of the PX market in Asia on the 21st were US$446/ton FOB South Korea and US$466/ton CFR China, down US$10/ton from the previous trading day. The downstream sentiment is cautious and wait-and-see. The transaction atmosphere in the polyester market continues to fall, production and sales have cooled down, and the operating load is around 83%. The market’s wait-and-see sentiment is strong. The overall transaction atmosphere of the polyester filament market continued to be light, and the quotations of mainstream polyester factories in Jiangsu and Zhejiang continued to fall steadily.
PTA supply is at a high level
High supply pressure, small production capacity in the later period The device is facing obsolescence. 2019 is the beginning of my country’s PTA industry once again entering the stage of oversupply. With the commissioning of PTA units of Zhongtai Petrochemical, Xinfengming and Hengli Petrochemical, the current domestic PTA production capacity has reached 52.255 million tons. As of April 21, the PTA operating rate was 92.77%, significantly higher than the same period in previous years. It should be noted that the PTA production capacity in 2020 is significantly higher than the production capacity base in previous years, so the overall supply pressure on the market is very high.
PTA processing fees are at a high level and are less likely to be reduced in the second quarter. Affected by the plummeting international crude oil, chemicals closer to the upstream have experienced greater declines. Therefore, due to the profit concessions of upstream naphtha and PX, the PTA processing fee once rose to 805 yuan/ton last week. Although we see that the absolute price of PTA has reached a record low, it can be seen from the PTA processing fee that the current production efficiency of PTA manufacturers is still good. Under such a high level of processing fees, PTA factories are very motivated to produce, which has led to the recent PTA operating rate being above 90%.
Processing fees can reflect the balance of supply and demand in a product market to a certain extent. We believe that the processing fee level of 700-800 yuan/ton is overestimated. Currently, PTA is in In the overcapacity stage, theoretically, processing fees should be low.
Affected by the weakening of cost-side support, the trading atmosphere in the PTA spot market has declined. The market is dominated by forward transactions. The load of looms has dropped significantly, and the load of polyester factories should have followed. However, due to the Tomb Sweeping Day holiday, speculative funds outside the industry went crazy for polyester filament, causing polyester factories to achieve a round of rapid destocking within 1-2 days. At present, the polyester filament DTY, POY, and FDY inventories in polyester factories are 27.5 days, 16.5 days, and 18.5 days respectively, which are basically within the safety stock level. However, due to the continuous decline in loom load, polyester factories will return to the inventory accumulation channel in the near future. middle. If overseas orders have not recovered in May, there is a risk of a decline in the start-up of polyester factories and the demand side of PTA will be under pressure.
There is a possibility of further decline in the start-up of the terminal weaving link. In the absence of major positive stimulation in the short term, affected by the weakening of cost-side support, the trading atmosphere of the PTA spot market has declined, and the market has declined further. Futures trading is the main focus. Downstream demand is flat and supply continues to increase. There is a possibility of further decline in the start-up of the terminal weaving link. In the absence of major positive stimulation in the short term, PTA prices are expected to remain volatile and downward. </p
