Affected by the continuous correction of cost-end crude oil prices, the chemical sector still showed a weak trend on May 14, with polyester products leading the decline in the chemical sector. In early trading on the 14th, PTA futures prices once hit the lower limit, then recovered slightly; short fiber and ethylene glycol both fell by more than 5% during the session.
Supply and demand weakened, and PTA prices fell sharply
It is worth mentioning that in the early trading on the 14th, all PTA futures contracts almost collectively fell to the limit. Regarding the recent sharp weakening of PTA prices, industry insiders believe that it is the result of the resonance of fundamentals such as falling costs and weakening supply and demand.
The largest.” Pang Chunyan, analyst at SDIC Essence Futures, said that CCF monthly output statistics are only 4.18 million tons, and the industry’s average monthly operating rate is 81%, the lowest level since 2019. PTA destocking in April is expected to exceed 400,000 tons.
According to her, from April to May, domestic major manufacturers reduced their supply of contract goods, and the PTA spot market was tight, resulting in relatively firm prices. Processing fees increased from mid-April. The low level of 300 yuan/ton has been repaired to more than 500 yuan/ton. At the same time, the price of acetic acid has loosened. The spot price of acetic acid in East China has dropped from a high of 8,400 yuan/ton at the end of April to the current 7,600 yuan/ton, and the corresponding cost of PTA auxiliary materials has dropped by 20-30 yuan/ton.
In Pang Chunyan’s view, the impact of oil prices on the PTA market from cost to mentality is one of the reasons for the sharp decline in PTA prices this week. In addition to cost, weakening supply and demand in May was also an important factor in the decline in PTA prices.
According to the reporter’s understanding, among the PTA devices that were parked in the early stage, Sichuan Energy Investment has 1 million tons/year, Zhongtai Chemical has 1.2 million tons/year, and Dushan Energy has 2.5 million tons. The restart of 10,000 tons/year was completed or planned in May. At the same time, downstream polyester companies reduced production due to rising inventories and declining profits. PTA supply increased while demand weakened. Compared with April, the PTA supply and demand pattern became significantly weaker.
“On the one hand, the recent negative sentiment on PTA has been relatively high, and the downstream polyester production and sales have been unfavorable. Some major manufacturers have announced maintenance plans, and the demand side has weakened month-on-month. On the other hand, On the other hand, the collective maintenance period has come to an end, subsequent PTA devices have been restarted one after another, and new production capacity has entered the market. The contradiction between PTA supply and demand will be further amplified, and prices will continue to weaken under the combined effects of the supply and demand side and the cost side.” Zhu Lihang, an analyst at Zheshang Futures, said.
In this regard, Dadi Futures analyst Jiang Shuopeng believes that the recent PTA fundamentals have gradually changed from tight in the early stage to loose, and social inventories have gradually depleted from April’s substantial destocking. Turning to accumulated warehouses, spot market liquidity increased. The 3.3 million tons production capacity of Yisheng New Materials, a new PTA device, is about to be put into production, which will put great pressure on the supply side.
“Downstream polyester is affected by high inventory and weakening profits. Equipment maintenance plans have increased significantly, and the load is expected to drop from high levels.” Jiang Shuopeng said that the current supply and demand of PTA Changes have occurred, supply has increased and demand has weakened. It is expected that social inventories will gradually accumulate, suppressing prices.
Insufficient demand support, frequent price reductions and promotions
The reporter learned that due to excessive fluctuations in raw material prices, polyester The negative impact is huge. Polyester products, mainly polyester filament, have also passively adjusted prices following the raw materials, which has affected the purchasing sentiment of downstream merchants. Downstream purchasing has been cautious, production and sales have been sluggish for days, and filament companies have been forced to cut prices and promote promotions.
In this regard, Longzhong Information analyst Zhu Yaqiong said that in the first half of the year, there was no substantial increase in demand in the traditional peak demand season of “Gold, Three, Silver and Four”. The high cost of raw materials and the fermentation of overseas epidemics have led to sluggish demand for end-use textile and clothing. Since May, some end-use weaving companies have reported that orders have improved compared to the previous period. However, small batch orders are not enough to digest inventory, and it is difficult to see substantial improvement in demand. “Since the beginning of this year, the start-up load of the polyester industry has increased rapidly, with the average monthly start-up at more than 90%, and the terminal weaving start-up has mostly remained around 70%. The contradiction between supply and demand has become prominent, so the frequency of promotions for polyester varieties in the first half of the year is relatively fast.”
Take polyester filament yarn as an example. In April, there were three rounds of concentrated discount promotions. Downstream buyers bought at low prices. Polyester filament yarn companies experienced destocking effects in the short term, but pulsed production and sales. Due to the demand for overdraft in advance, the market becomes increasingly deserted after the event, and as the frequency of promotions accelerates, the promotion time has become a node for downstream procurement. Because the market outlook is pessimistic, users also purchase more on demand to alleviate the pressure on raw material inventory.
“The periodic promotional activities have not substantially improved the high-pressure inventory situation of enterprises, and many downstream users have adapted to the promotional purchasing model. Therefore, if Without the promotion of promotional activities, the sales resistance of polyester will further increase, and the focus of market transactions will continue to decline through promotional activities. When the company’s cash flow reaches a state near the break-even line, the company will inevitably consider limiting production to protect prices and promote sales. For the polyester industry, this model is undoubtedly a poison to quench thirst.” Zhu Yaqiong said.
Similarly, in Zhu Lihang’s view, frequent price reduction promotions are not a good thing for the industrial chain, affecting the profits of polyester manufacturers, and polyester factories are gradually beginning to Maintenance, polyester production starts are gradually weakening, and the rigid demand for raw materials will also weaken month-on-month. “Zhu Lihang said.
At present, in the downstream polyester market, products such as bottle flakes, staple fibers and chips have beenIn the break-even or loss-making state, the huge profits of filament products are also being squeezed. CCF data shows that as of last Friday, DTY and FDY inventories have been higher than the same period in the past five years, and POY inventory is at a high over the same period in the past five years.
“At present, the downstream polyester end is generally weakening, profits are compressed and inventory is high, resulting in increased equipment maintenance, and it is expected that the load will decline significantly in the future. Polyester terminal weaving The industry has entered the off-season, but currently short-term terminal orders have increased due to the impact of 618. There is still support in the short term, but orders in the later period are still small, especially overseas orders have not yet recovered, and the overall downstream terminal demand support is still weak.” Jiang Shuopeng believes that in the terminal When demand is weak and production and sales continue to weaken, the polyester segment uses price reductions and promotions to achieve the purpose of destocking and promote production and sales in the short term, but it cannot improve the contradiction between supply and demand.
Excess is still the main tone
It can be seen that the supply and demand of various varieties in the polyester industry chain are different. However, overall PTA and ethylene glycol are in a period of concentrated launch of new production capacity, and mid- to long-term excess is still the main tone.
“For PTA and MEG, the background this year is still a large amount of production capacity. On this basis, profits may continue to be compressed at a low level. “Zhu Lihang said that judging from the current fundamental situation, PTA and MEG will enter a continuous accumulation cycle, and profits will be compressed to levels near the profit and loss line. “Leaving aside the cost-side drivers, it is difficult for the polyester chain to see major trend trends in the future. We can pay attention to the opportunities for significant price changes in the market under the influence of short-term supply and demand mismatch, as well as the opportunities for subsequent valuation corrections.”
In Pang Chunyan’s view, PTA processing fees rebounded to more than 500 yuan/ton in May. At the same time, acetic acid weakened, cost pressure eased slightly, and there was room for a slight decline in processing differences, but Space is relatively limited. After the processing difference is compressed to about 400 yuan/ton, PTA will once again operate close to cost. The space and sustainability of the downward shift of the center of gravity depend on the price trend of upstream raw materials represented by crude oil.
“There are currently two factors affecting the price of PTA: one is the cost-end crude oil price, and the other is the fundamental situation of PTA itself.” Jiang Shuopeng said that with the PTA With the fundamentals weakening and new equipment expected to be put into production, PTA is expected to remain under pressure and the processing gap to remain at a low level unless crude oil prices fluctuate significantly. In the later period, we still need to focus on crude oil prices, the commissioning of new equipment and the recovery of terminal overseas orders.
“As far as PTA is concerned, there are still 6.6 million tons/year of new equipment planned to be put into operation during the year, of which 3.3 million tons/year is expected to be put into operation from the end of May to June. , the supply-side increase may reach a new high. The downstream polyester load is relatively high, but some devices are expected to reduce production in the near future, and the load is at risk of declining, and is expected to be around 89%, so it will weaken PTA demand to a certain extent.” Industry insider Sun Xuefei He said that overall, under the expectation of weak supply and demand, the PTA market lacks strong upward momentum and may continue to suffer from weak adjustments in the short term. Whether there will be a turning point in the later period requires attention to changes in cost and self-regulation of supply and demand.
In Zhu Lihang’s view, the downward shift of PTA’s center of gravity will not last long. “The price drop of PTA this time exceeded the drop in cost, which caused a significant reduction in processing fees. When the price of the catalyst glacial acetic acid remained high, PTA production companies suffered serious losses. This situation cannot be maintained for a long time.” He said that after the emotion, , PTA valuation will still gradually recover to normal levels.
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