Introduction
After the “suspected peak” at the end of July, with the adjustment of international oil prices and the gradual change of months of the main contracts, PTA ushered in a three-week adjustment. The maximum decline of the 2401 contract reached 9.4%. The previous upward trend was about to be wiped out. fell below. However, starting last Friday, the market situation suddenly changed. PTA rose nearly 5% for two consecutive trading days. The main 2401 contract once again exceeded the 6,000 mark. A new high is just around the corner. The bulls who just ran away seem to be back. This article believes that the rise in PTA is just a revision of the previous consensus expectations and does not mean a substantial change in fundamentals. The rising momentum of PTA has not returned, but the rising trend in recent days also shows that the current market is not as pessimistic as imagined, and the short-term price trend of PTA is expected to turn to a high and volatile pattern.
Since the main contract hit a high of 6148 on July 31 with the help of typhoon rumors, the PTA market has experienced a sudden change, falling by nearly 10% in three weeks. This trend not only wiped out most of the previous gains, but was also significantly weaker than the trend of the chemical market. However, in this process, PTA’s fundamentals have not actually changed significantly. The correction in the past three weeks is more of a jump-start by short sellers in response to unanimous expectations.
In this process, shorts mainly trade three expectations:
1. The first is the marginal weakening of demand. Since June, the load of PTA’s downstream polyester plants has remained at a high level between 92-94%, which has provided strong support for PTA’s early rise. However, as of August, downstream orders during the peak season have not yet seen a significant boost, and polyester inventories have begun to accumulate slightly. Combined with the impact of the Asian Games in September, the market expects that the polyester load will fall from the high level in September.
2. The second is the peak of oil prices. Breaking down PTA’s early growth, we can see that most of PTA’s growth was contributed by the increase in costs, whether it was the rise in international oil prices or the strength of upstream PX profits. Since August, the release of U.S. economic data and the Federal Reserve’s once again hawkish stance have hindered the short-term rise in international oil prices. The unexpected rise in U.S. crude oil production is also expected to provide a strong hedge against OPEC+’s production cuts. In this case, the market’s expectations for a further rise in oil prices in the short term have produced a certain reversal.
3. The valuation of upstream PX has fallen. Since the second quarter of this year, the demand for oil blending has continued to affect the Northeast Asian chemical market. Competition for aromatic hydrocarbon raw materials in oil blending pools has continued to leave a gap in the supply of PX. PXN has always been at a high level of more than 400 US dollars per barrel, and with the help of typhoons in late July The hype went up. However, as the North American gasoline peak season gradually comes to an end, expectations for a seasonal decline in gasoline crack spreads have gradually increased. The decline in oil blending profits will bring about the return of aromatic raw materials, and PX’s high valuation is expected to be unsustainable.
The above three unanimous expectations have caused market sentiment to gradually become bearish. The superimposed 09 contract month change is approaching, and the 01 contract is traditionally a weak contract seasonally. In this case, the bulls lost the target in the short term and left the market intensively, which caused the PTA to weaken significantly in the first three weeks of August.
However, in the middle to late period, the above consensus expectations appeared to be falsified to a certain extent. At present, international oil prices have rebounded slightly but have not yet touched the previous high, while the demand side is still operating steadily. The expected falsification mainly occurs in the resilience of PXN. Although the North American gasoline split fell as expected, the advance stocking caused by the hurricane caused the U.S.-Asia aromatics price gap to rise instead of falling. Overseas PX load has always remained low at around 65%, and the recovery of PX supply (especially the import side) has not met expectations. The PX import volume announced on Monday and South Korea’s export volume in early and mid-August were both lower than expected, which further exacerbated concerns about import supply.
What’s more, the reversal of PX supply expectations has further affected the PTA side. Since late July, based on expectations of PX supply recovery and PXN narrowing, integrated PTA units with upstream raw material support have been eager to cash in on the high profits on the PX side. This has resulted in PTA processing fees being compressed to extremely low levels (even reaching negative values at one time). ), a high load near 80% is still maintained. However, when PX supply did not recover as scheduled and PXN continued to be resilient, mainstream PTA suppliers also began to show signs of overhaul. On Monday, a 2.2 million-ton unit in Northeast China announced that it would be shut down for maintenance, which undoubtedly further boosted PTA’s rebound.
On the disk, the resilience of the bulls also seems to be stronger than expected. Although the bulls on the 09 contract collectively left the market due to insufficient trading time, the main battlefield did not shift to the far-month 01 contract as quickly as usual. At present, the 2310 contract has become the sub-main contract of PTA, which is very rare in this year’s PTA market. It can be seen that the bulls did not stop and leave after leaving the 09 contract, but stayed in the front-month contract, indicating that the market is still quite optimistic about the fundamentals of the current PTA. With the negative expectations falsified to a certain extent, the overall commodity market sentiment is still high, and the RMB exchange rate has also given strong assistance, PTA’s short-term rebound is natural.
However, this short-term rebound is not fully supported by fundamentals. In comparison, the current fundamentals of PTA are still significantly weaker than those at the end of July. The international oil price fell back after failing to hit US$90/barrel upward, and is currently only hovering around US$85/ton. The rising momentum has turned to shock; although the supply of imported PX has never returned, the high domestic production still makes the domestic PX supply and demand gap close.The effect has been alleviated; and as the peak season time window approaches, the expectations and space for boosting downstream orders have become increasingly weak. At present, the most powerful supporting factor for the rise of PTA may be the RMB exchange rate. But how much room does the exchange rate of around 7.3 have in the short term?
Therefore, although PTA has been aggressive in the last two trading days, it is to a greater extent just a correction of the previous “oversold”, and the fundamentals do not support further upside of PTA. Although the trend of PTA in the market outlook will not be as weak as the early market expectations, the sustained upward trend from June to July will also be difficult to reproduce, and there will be a high probability of high volatility at the end of the third quarter. In this case, unilateral operations will have certain risks, and short-term range operations or related option combinations may provide good operating ideas.
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