Short-term market transactions will focus on the negative logic brought about by changes in the energy market. The medium-term trend of crude oil prices is still an important directional indicator of PTA prices. In addition, the demand resilience of the polyester industry chain is still there, and the profits of the industry chain are expected to be transferred from PX to downstream PTA.
During the long holiday, crude oil prices fell sharply, and U.S. gasoline prices continued to weaken in the off-season. The weakening crude oil price has a direct drag on the cost of downstream chemicals; gasoline prices continue to fall, falling to a low level over the same period in five years, and the profits of aromatic hydrocarbon blended gasoline have declined, which has a negative impact on aromatic hydrocarbon products such as PX and pure benzene and related downstream PTA and styrene. Negative impact.
Falling oil prices are negative for chemical products
Affected by multiple factors such as U.S. bond yields, a higher U.S. dollar, and weaker U.S. gasoline renewals, crude oil prices fell sharply during the long holiday. The direct impact of falling crude oil prices on petrochemicals is cost collapse, which will drag down the entire chemical market to varying degrees. Among them, asphalt and refined oil products, which are more directly related to crude oil, suffered the largest declines. The Japanese spot price of naphtha CFR, a raw material for chemical products, fell significantly during the same period, about 8.5%, slightly lower than the 9.3% decline of Brent crude oil. Downstream aromatic hydrocarbons such as MX followed the decline sharply, while olefin products such as ethylene and propylene performed stably. This was reflected in the domestic market on the first trading day after the holiday. The declines of PX, PTA and styrene were significantly greater than those of plastics, polypropylene and other products.
Before and after the long domestic holiday, CFR China’s isomer grade MX fell by 7.3%, CFR China’s PX fell by 6.4%, CFR China’s pure benzene fell by 7.35%, and olefin prices were stable. The divergence of aromatics and olefins trends is mainly due to the overestimation of aromatic products due to the demand for aromatics in gasoline in summer. However, as the temperature drops and the demand for gasoline falls, the gasoline cracking spread continues to decline, the benefits of aromatic oil blending decline, and aromatic raw materials such as MX and toluene return After the chemical market, it is expected that the load of PX and pure benzene devices in Asia will rebound in the fourth quarter, and the high valuations of PX and pure benzene will continue to be under pressure. The author predicts that the above logic will continue until the first quarter of 2024; the PX-Brent price difference will return to oscillate around 350-400 US dollars/ton. According to the current price difference, there is still some room for downside.
Equipment maintenance is expected to increase
In mid-to-late September, two PTA units with a total capacity of 1.9 million tons in Southwest China were shut down. At the beginning of October, Yisheng New Materials’ 3.6 million-ton unit was shut down for maintenance for some reason. It was originally planned to restart on October 9, but it has been postponed. The maintenance of Yisheng Ningbo’s 2.2-million-ton unit was postponed, and its 2-million-ton unit is scheduled to be overhauled at the end of October; Hengli Petrochemical No. 2’s 2.2 million ton unit is scheduled to be overhauled in early October; Zhuhai Ineos’s 1.1 million ton unit is scheduled to be overhauled from mid-October to the end of November. Judging from the above device maintenance plan, in addition to the two devices that were shut down in September, there will be 3-4 devices that will be overhauled in October, involving a production capacity of more than 10 million tons. Since September, the PTA spot processing gap has been operating at a low level of less than 200 yuan/ton. Considering the PTA device maintenance and the expected increase in polyester load in the future, there is room and drive for repairs in the processing gap, and the demand for PX in PTA device maintenance has weakened. drag. Therefore, industry chain profits are expected to shift from PX to PTA in stages.
Downstream market consumption resilience remains
In late September, the polyester industry’s start-up dropped from around 93% to around 89%. However, considering that the industry is in the peak consumption season, the polyester start-up load is still expected to rebound in October. At present, terminal weaving operations have returned from the low level during the long holiday to the level before the holiday. The rigid demand still exists, and stocking is expected in October, and the demand resilience is still there. However, there are many negative concerns in the industry chain. On the one hand, domestic polyester yarn production and sales are slow during the long holiday. According to CCF assessment, polyester yarn inventory may be accumulated in 6-7 days. On the other hand, falling crude oil prices will suppress the enthusiasm of downstream markets to replenish their inventories, and the industry chain may experience periodic negative feedback pressures. In July, the downstream began to prepare for the peak season, and the demand in various links has been advanced. There is uncertainty in the peak season demand in October.
Summary and market outlook
During the long domestic holiday, the sharp drop in external crude oil prices had a direct drag on domestic chemical products. Afterwards, chemical products tended to make up for the decline. U.S. gasoline prices continue to fall, and the benefits of aromatic oil blending have declined sharply. It is expected that raw materials such as MX and toluene will return to the chemical market. The supply of PX and pure benzene is expected to rebound, and valuations will also be under pressure. This is also the reason for PX-PTA and benzene after the holidays. The main reason why ethylene fell more than plastic and PP. At present, the valuation of PX is still on the high side, and there is room for further decline. The centralized maintenance of PTA will benefit its processing difference. Therefore, the profits of the industry chain will be transferred from PX to downstream, and we can go long PTA processing difference in stages. Although the resilience of polyester terminal demand is still there, there are also certain concerns in the market, so the demand side is currently treating it with cautious optimism.
Looking at the market outlook, the periodic negative impact on crude oil prices has been released, and the market outlook is affected by geopolitical uncertainty. Once crude oil prices stabilize, market sentiment may turn somewhat, which will increase the enthusiasm of downstream stocking, and is expected to strengthen the repair of PTA processing defects in stages. logic.
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