In the first half of 2022, the domestic PTA (purified terephthalic acid) market price showed an upward trend. Data show that the average price of PTA in the first half of the year was 6,139 yuan/ton, a year-on-year increase of 39.23%. However, the sharp rise must be followed by a sharp fall. Entering the second half of the year, the domestic PTA market is on the verge of collapse. As of July 13, PTA’s main futures 2209 hit the lower limit during the session, falling to the 5570 yuan line, and closed at the lower limit in the afternoon. The main contract 2209 closed at 5570 yuan, down nearly 10% from the average price in the first half of the year.
The current decline in the PTA market is due to weakening costs on the one hand and weak terminal demand on the other.
On July 12, international oil prices fell sharply again. The settlement price of August 2022 West Texas Light crude oil futures on the New York Mercantile Exchange was US$95.84 per barrel, down US$8.25 or 7.9% from the previous trading day; London Intercontinental Trading The settlement price of Brent crude oil futures in September 2022 was US$99.49 per barrel, a decrease of US$7.61, or 7.1%, from the previous trading day. After two days of sharp upward adjustments, international oil prices fell sharply again on July 12, with WTI and Brent both falling to the lowest settlement prices for front-month contracts since April this year. Obviously, the current market concerns about crude oil demand are still rising. Affected by this, cost-side support weakened, causing the PTA market to show a downward trend.
Entering July, Hengli Petrochemical’s 2.5 million ton unit and Fuhai Chuang’s 4.5 million ton unit were overhauled as planned. The supply volume shrank significantly, and factories were reluctant to sell due to tight supply. This resulted in a sharp strengthening of the futures-to-cash basis, from 200 in early July. Yuan/ton rose to a maximum of 650 yuan/ton. However, downstream demand is in the off-season, polyester and terminal demand are weak, and factory inventory pressure is high. The sluggish demand will bring certain negative effects to the PTA market. As the weather turns hotter, some polyester factories have implemented production cuts one after another. The polyester load has dropped to 79%, and the terminal weaving operation has dropped to 50%. With the introduction of the power restriction policy, some downstream factories still have load reduction expectations. Under weak demand, PTA spot prices may continue to weaken.
Processing fees have hit new lows
Times are tough for PTA companies
While the price of PTA has skyrocketed and plummeted, its processing fees have repeatedly reached new lows, and the production profits of related companies have been greatly compressed.
Taking May as an example, the PTA processing fee value is basically maintained at 100 to 300 yuan/ton, with the lowest being 60 yuan/ton. Most companies suffered serious losses. As of May 25, the company’s processing fee remained at about 198 yuan/ton. In the face of lower processing fees, some major factories have implemented annual maintenance plans, so supply has decreased. For the PTA market, prices are relatively resistant to falling prices.
In the first half of the year, PTA processing fees continued to show a low and volatile trend, and the overall profit performance of manufacturing companies was poor. The main reason was that the cost side continued to rise, but the downstream demand for PTA was insufficient to follow up, resulting in PTA price increases being limited. PTA processing fees once plummeted to – 120 yuan/ton. In the first half of this year, the average PTA processing fee was only 385 yuan/ton. Compared with the theoretical profit and loss price of 500 yuan/ton, most PTA companies are in a state of loss.
Jinxin Futures predicts that from the perspective of supply and demand, before the large-scale elimination of old production capacity, the supply of PTA will be generally loose, processing fees will hardly improve significantly, and the operating rate will be suppressed; on the demand side, although domestic demand is expected to boost in the second half of the year, but External demand pressure may increase, and it will be difficult to quickly boost overall demand. Considering that the current polyester inventory is at a historically high level and the destocking speed is slow, the direct demand for PTA is facing greater pressure.
Production cuts have become the norm
Survival of the fittest in the industry accelerates
Since the beginning of the domestic large-scale refining and chemical era, a large amount of capital has rapidly poured into the PTA industry. In recent years, the new demand brought by environmental protection upgrades has boosted the production capacity of the polyester industry, and the production capacity of PTA as the upstream has followed closely. This has led to domestic large-scale production of Hengli Petrochemical, Hengyi Petrochemical and Dongfang Shenghong. Private refining and chemical companies began to invest in the PTA industry on a large scale.
On June 28, Dongfang Shenghong announced that it plans to invest 3.939 billion yuan to build a 2.4 million tons/year PTA phase III project. The company’s integrated industrial layout has been strengthened again, and the PTA production capacity of the subsidiary executing the project will increase to 6.3 million tons/year. Year.
“In fact, Yisheng New Materials’ 2# PTA device was successfully put into operation in the first half of 2022. As of now, the domestic PTA production capacity is 67.805 million tons. However, there are still 12.5 million tons of devices planned to be put into operation in the second half of the year, and PTA overcapacity has become an industry consensus.” Industry analysts told reporters that if the new device is successfully put into operation in the second half of the year, the production capacity will be approximately 80.305 million tons, an increase of 18.44%. However, it is not ruled out that under cost pressure, there is a risk of delay in the commissioning of new equipment, and the operating rate of existing enterprises may remain at low load.
In the first half of 2022, domestic polyester production capacity increased by 1.85 million tons. As of now, domestic polyester production capacity is 69.175 million tons. It is understood that there are still 4.08 million tons of new equipment planned to be put into operation in the second half of the year. It can be seen that domestic polyester production capacity will continue to grow, and domestic polyester production capacity will exceed 73.255 million tons by then. If the device is put into operation smoothly, 1.75 million tons of PTA may be consumed in the second half of the year. However, it is still insufficient according to the new increase in PTA. For now, the substantive demand for downstream polyester and end-use textiles is increasing slowly, and inventories in all links of the industrial chain remain high, making it difficult for demand to increase further.
However, production�The excess has also led to a decline in industry operating rates this year. Data show that in the first half of 2022, PTA’s monthly average construction start-up was only 73.82%, a decrease of 7.55% year-on-year in the first half of 2021. Judging from the overall equipment maintenance situation and changes in operation, the PTA operation rate continued to decline during the year, and the maintenance amplitude was relatively large. Among them, in April and May, the monthly maintenance volume of PTA reached more than 20 million tons. Relevant production companies have become the norm to reduce production due to poor profits.
</p
