1. Research enterprise: a large trading company in East China
Excerpted point of view: PX cost support is still there, PXN is difficult to compress in the short term, the impact of terminal consumer demand has gradually become more prominent, and the Asian PTA export pattern has changed.
1. The types of trade, trade volume, sources of goods, main trade forms, etc. that the enterprise mainly participates in: styrene (200,000-300,000 tons/year), ethylene glycol (400,000-500,000 tons/year), PTA (500,000 tons/year) year), refined oil (700,000 tons/year). Part of the supply comes from the parent company’s factory, and part comes from market purchases. The trading model combines futures and spot trading, with basis trading as the mainstay, risk exposures are strictly controlled, and speculative positions are relatively small.
2. Whether the company is engaged in PTA export trade and how to price export goods: Export performance is good, and the main export areas are the Middle East, South Asia, and India. However, it should be noted that India has product certification for imported goods, and only manufacturers that have passed product certification can export products to India. The last phase of certification for my country’s PTA manufacturers expired in May 2023. Since mainland Chinese manufacturers have failed to obtain the new phase of product certification from India’s BIS (Indian Product Certification Body), they will not be able to export directly to India in the future. The PTA export price is based on the PX price. The specific calculation method is: PTA export price = PX Platts window monthly average price * coefficient + premium and discount. The premiums and discounts are mainly determined through negotiation. For long-term export contracts for the following year, the negotiation time is usually at the end of this year.
3. How big is the impact of BIS certification in India? Whether there is transshipment export or other solutions: BIS certification has a certain impact, and even affects some orders that have been signed, but India still has a gap of about 1 million tons per year, and BIS certification will lead to the redistribution of the PTA area. The transshipment method is not feasible because the product packaging of leading companies contains identification information. There are two main other solutions: one is to apply for an extension of product certification, but the probability of success of this method is not high; the other is to rely on the cost advantage of my country’s PTA production and cooperate with Taiwan’s PTA factory to allow Taiwan to export certified PTA to India. , Mainland China manufacturers will export PTA to fill the gap in Taiwan’s local demand and retain the profits from my country’s PTA exports.
4. How do you view this year’s PTA market? Will the May market repeat itself in September?
my country’s PTA supply is generally in excess, and investment opportunities need to be found in the mismatch between supply and demand. There is a high probability that September will not be able to replicate the April market trend. During the trading process in April, it was clearly felt that spot goods were in short supply. Specifically, it was felt at the end of March that the spot circulation was not good, and even if the spot goods were purchased, it would be difficult to obtain them in a short time. The spot market has not been tense recently, but there is still time before the September contract expires, and we need to wait for market changes.
5. Will the processing fee of PTA affect the pace of starting operations and reducing production shutdowns: Processing fees are one of the many factors to consider when starting a factory and reducing production shutdowns. There are many other factors that need to be considered, such as raw material inventory, etc. Processing fees cannot be relied upon alone. Decisions to start or reduce production.
6. PX output is increasing. How to view the PXN spread and PTA processing fee trends: Although PX output has increased, it is still in short supply for PTA production. The PXN spread trend requires more attention to changes in naphtha prices. If stone Brain oil continues to be weak, so it is difficult for PXN spreads to be compressed. In addition, we also need to pay attention to the American and Asian xylene arbitrage window, but there is little chance of the window opening in the second half of the year.
7. As a trader, how do you feel about the demand for polyester: Polyester experienced a long period of weakness last year, and many polyester factories chose to shut down operations to clear inventory. As a result, in the first half of this year, despite high operating conditions, the inventory accumulation rate was also slow. Not fast. However, I personally believe that the accumulated stocks of filament, texturing and printing and dyeing are almost there. The demand situation of weaving terminals in the second half of the year will form a certain feedback to the upstream. In the first half of the year, terminal demand is flat, and the contradiction of maintaining high polyester production capacity will not appear.
8. Will the newly introduced refined oil consumption tax have a big impact on PX: I think this expansion of the refined oil consumption tax will mainly affect tax-avoiding diesel manufacturers, and will have a very limited impact on PX production.
2. Research enterprise: a chemical fiber factory in East China
Excerpted point of view: Staple fiber export profits are good, downstream stocking is not strong, and demand has not improved significantly.
1. The company’s main business: Mainly engaged in polyester production, with a total production capacity of 500,000 tons, including 400,000 tons of short fiber and 100,000 tons of chips (newly put into production on July 8), currently operating at full capacity.
2. What is the company’s product inventory and operating rate? Product inventory is about 1 week. The current short fiber processing fee is relatively good because the overall operating rate of short fiber is not high, but the expectations are not optimistic. In terms of operating rate, there will be no reduction in July for the time being. On the one hand, there are not many products in stock, and on the other hand, processing fees are still within an acceptable range. After entering August, if the processing fee is further reduced to less than 800 yuan/ton, we will consider reducing and suspending production.
3. How to view the recovery of downstream demand: For enterprises themselves, downstream demand has been severely impacted by peers, and the mid- to low-end markets have been seized. At the same time, exports shrank severely. Before the epidemic, the export volume was about 10,000 tons/month. During the epidemic, there was a serious decline. This year, the export volume has returned to the level of 5,000-6,000 tons/month, which is about 50% lower than before the epidemic. The current export destinations are mainly Europe and Russia.Russia and the United States are unable to export due to various reasons.
4. How to view the trend of short fiber processing fees in the second half of the year: Short fiber processing fees may improve, but the extent is limited. The improvement mainly comes from PTA’s profit transfer. It is difficult for PTA to replicate the market situation in April in the second half of the year. The negative impact of the Asian Games on the load of polyester factories will most likely be realized. In addition, the current supply of PTA spot market is loose, unlike in March and April when the spot market was tight and liquidity was poor.
5. How the company mainly purchases raw materials: 70% of PTA raw materials are mainly purchased through signing long-term contracts, and the settlement price is based on the monthly average price. The other 30% of raw materials are mainly purchased from traders in spot. All MEG is purchased from the market, mainly oil-based MEG from traders. The main reason for not purchasing coal-based MEG is the risk of failing export product certification.
6. Is there an obvious off-peak and peak season in the downstream: The downstream of staple fiber mainly includes yarn, spunlace non-woven fabrics, hot-melt fabrics, etc. There is no obvious off-peak and peak season, and the current situation in the downstream is mediocre.
7. What is the current sales model of the company and whether there is any promotion: 70-80% of the products are sold directly to downstream factories and settled in cash, and the other part is sold to futures merchants. In terms of pricing, factory prices are still the main focus at present, and futures pricing has not yet been adopted. Promotions are generally not conducted. However, the sales models of different factories are different.
8. How does the company’s cost compare with other factories? Overall, the company’s cost will be about 100 yuan/ton higher than that of other factories. The main higher part comes from the use of natural gas. Due to different regional government regulations, factories in some areas still use coal for heating production, but the local government stipulates that the company must use natural gas.
9. Whether downstream short fiber factories will participate in futures trading: There will be attention, mainly on PTA and short fiber. Some manufacturers also do hedging, but most manufacturers have less trading activities.
10. How much impact does cotton price have on short fiber: When cotton prices are high, short fiber can play a certain substitution role, but overall the amount is not large.
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