Negotiations between Russia and Ukraine have made substantial progress. Although a final agreement has not yet been reached, the market believes that the risk of the situation between Russia and Ukraine getting out of control has decreased. The selling atmosphere of chemical products continued, and the correction of some varieties was not small. Polyester chains collectively turned green. PTA fell 2.96% to 5,910 yuan. EG and staple fiber fell 5.56% and 3.28% respectively.
The latest developments in the situation between Russia and Ukraine over the weekend showed that the possibility of a meeting between the presidents of Russia and Ukraine cannot be ruled out. Ukraine said that after the agreement is formulated and the two parties reach a consensus in advance, the presidents of Ukraine and Russia can meet and conclude a peace agreement. Sanctions imposed by Europe and the United States on Russia have intensified supply-side tensions, but it is difficult to make a definite judgment on the relevant impact. The market will continue to follow the changes in the situation to assess the extent of the impact.
International oil prices have skyrocketed and plummeted. The prices of naphtha and PX have risen rapidly. The crack price of naphtha has also risen to around US$300/ton. After the loss of PX last year, the PX end has increased significantly this year following the oil price. As the cost price further increases, PTA’s profit margin shrinks. According to Longzhong Information’s estimation, based on the industry’s average processing cost of 600 yuan, the average profit level is already negative. For refining and chemical integration and large-scale installations, the current processing fees are already difficult to survive. It is even worse for small and medium-sized enterprises.
In the short term, companies may have stocks in stock during the actual production process, but if the PTA processing gap continues to decline, PTA device maintenance will gradually surface. At present, the maintenance of PTA equipment is gradually becoming clear. Some of Yisheng’s equipment have begun maintenance one after another. Hengli also has maintenance plans from March to April. Fuhaichuang also reduced its load in early March. The supply side has begun to shrink, and the market has gradually begun to destock.
Staple fiber cost support is strong, processing fees continue to be low, and factory cost burdens are heavy. Some polyester staple fiber companies have successively announced maintenance. Yida plans to stop all operations over the weekend, and Sanfangxiang plans to reduce production by 200,000 tons/year. The market next week The shrinkage is expected to be obvious; in terms of demand, the situation of new orders in the downstream pure polyester yarn market has not improved significantly. Terminal buying is still dominated by rigid demand and hedging orders, and downstream procurement is still generally cautious.
As the supply and demand pattern of ethylene glycol weakens, follow-up is obviously ineffective. In order to cope with the deteriorating cash flow situation, many companies have taken the initiative to reduce their load or directly stop operations. According to the current crude oil price, the integrated ethylene glycol unit is still at a loss, and some integrated plants have recently begun to make some adjustments to reduce the load. In addition, overseas devices also face such problems. Longzhong Information believes that the maintenance of this round of devices is mostly concentrated in Northeast Asia, and the supply and demand pattern in April will face a major improvement.
On the demand side, as polyester factories did not undergo major maintenance before and after the Spring Festival holiday, and terminal demand was insufficient, the overall inventory pressure continued to increase. Returning from February, the overall load of polyester ends continues to rise. Factories have also conducted price reductions and promotions many times to release inventory pressure. High costs and low profits support prices, but high inventory and low demand still inhibit its upside.
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