Introduction: Since 2022, China’s PTA industry chain has continued to expand and continue to develop in the direction of integration. However, due to the rapid expansion of the PTA industry, coupled with the impact of the surge in energy prices caused by the Russia-Ukraine conflict during the year and the global economic recession, the profitability of upstream and downstream products has weakened, the pressure of industry competition has intensified, and the prosperity of the PTA industry has gradually declined. However, the PTA factory equipment underwent phased load reduction and maintenance, and the operating rate remained low during the year. The tight spot liquidity caused the futures-to-cash basis to rise sharply. However, with weak economic consumption, terminal demand has been weak, and the market has a strong wait-and-see sentiment.
1. China’s PTA production capacity continues to expand, and some long-term shutdown devices are cleared.
In 2022, 5.8 million tons of new domestic equipment will be put into operation, and 3.05 million tons of equipment will be eliminated, adding a total of 2.75 million tons. By the end of 2022, the total domestic PTA production capacity will reach 70.305 million tons. This year, the processing fees of PTA companies have remained at a low level. Some production companies have frequently reduced loads and shut down for maintenance due to loss-making conditions. The pattern of destocking has emerged during the year. However, from the perspective of supply and demand, the domestic PTA market is in an oversupply pattern. According to Jin Lianchuang statistics, according to existing production capacity and public information, new PTA devices will continue to be launched in 2023. It is expected that the supply and demand situation in the PTA market will be difficult to improve in 2023, and oversupply is still the industry consensus.
2. China’s PTA production has increased significantly, with a year-on-year increase of 4.30%
Domestic PTA production showed an increasing trend from 2018 to 2022, but the growth rate slowed down and then gradually declined. After several new PTA units were put into operation, the domestic overcapacity situation intensified. Although the new downstream polyester production capacity was put into operation and the demand increased steadily, driving the growth of PTA production, the overall growth rate has slowed down. In 2022, domestic PTA production will be 53.751 million tons, an increase of 1.02% compared with last year.
3. China’s PTA import volume continues to decline, hitting a record low
After China’s PTA import volume showed an increasing trend from 2018 to 2019, it declined from 2020 to 2022, with a larger decline in 2021. On the one hand, the reason is that new PTA production capacity is concentrated, and domestic PTA production capacity is oversupplied. Some downstream polyester factories purchase raw materials nearby; on the other hand, sea freight has risen sharply, and the supply of centralized containers exceeds demand. Due to cost pressure, most businesses have canceled imported goods. Mainly use domestic products. In 2022, import volume reached the lowest level in history. The total import volume from January to November was approximately 59,700 tons, a decrease of 4,200 tons compared with the same period last year.
4. China’s PTA export volume continues to rise sharply, reaching a record high
China’s PTA export volume will generally show an upward trend from 2018 to 2022. The main reason is that the current domestic PTA industry is severely oversupplied. In order to seek more development opportunities, manufacturing companies are actively exploring foreign markets and driving up PTA export volume. On the other hand, the permanent parking of many sets of PTA devices abroad also provides certain space for domestic enterprises to develop externally. As oversupply gradually becomes the consensus of the domestic PTA industry, domestic PTA export volume gradually increases, which also lays a solid foundation for the internationalization of the PTA industry. Due to the increase in new domestic production capacity, my country’s PTA export activity will increase from 2021, and export volume will increase significantly. According to statistics from Jin Lianchuang, my country’s cumulative exports from January to November 2022 will be approximately 3.2045 million tons, an increase of 888,600 tons from last year. Ton.
5. Start-up of new PTA production equipment and elimination of old equipment
1) Yisheng New Materials 2#3.3 million ton device was successfully put into operation in February.
2) An 800,000-ton unit of Liaoyang Petrochemical has been shut down for a long time, so this capacity has been eliminated.
3) A 1.65 million-ton unit of Xianglu Petrochemical has been shut down for a long time, so this capacity has been eliminated.
4) A 600,000-ton unit of Zhuhai Ineos has been shut down for a long time, so this production capacity has been eliminated.
5) A 2.5 million-ton unit of Weilian Chemical was put into operation in November with a capacity of 1.25 million tons, and another unit with a capacity of 1.25 million tons is scheduled to be put into operation at the end of January 2023.
6) A 2.5 million-ton unit of Tongkun Petrochemical will be put into operation in December 2022 with a capacity of 1.25 million tons, and another unit with a capacity of 1.25 million tons is scheduled to be put into operation in early January 2023.
6. The theoretical data on processing fees of PTA companies showed negative values, hitting a record low.
Entering 2022, the processing fees of domestic PTA companies will continue to decline. At the beginning of the year, the processing fee remained at 600-700 yuan/ton. When the international oil price soared to 130 US dollars/barrel, the price of raw material PX rose simultaneously. However, the price increase of PTA products is slow, and PTA processing fees have hit new lows repeatedly. Although the main PTA suppliers’ equipment has been intensively overhauled and the supply has shrunk significantly. At the same time, the demand for downstream polyester has gradually recovered, and the market accumulation has been alleviated. However, the PTA processing fee has not been repaired as expected. The fundamental reason for this result is Prices on the cost side have risen too fast, while downstream demand has been weak. The upstream and downstream are in a serious imbalance, and the profits of intermediate products have been greatly squeezed. As of March 9, the average processing fee for PTA spot goods was -91 yuan/ton. The mainstream price of acetic acid in East China on that day was 4,125 yuan/ton. The converted consumption cost of PTA per ton was 144 yuan/ton. If the cost of acetic acid is excluded, the PTA The net processing fee is only -235 yuan/ton, a record low.
7. The main suppliers are purchasing and reluctant to sell PTA, and the basis difference peaks in the middle of the year.
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 (refer to 2209 contract). However, downstream demand is in the off-season, polyester and terminal demand are weak, and factory inventory pressure is high. The sluggish demand has brought negative consequences to the PTA market.Definitely bad. 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 weakened. However, on August 18, the mainstream PTA spot transaction price began to refer to the futures 2301 contract price. On September 5, the mainstream PTA spot transaction price referenced the futures 2301 contract price at a premium of 1,000 yuan/ton, hitting a four-year high and 427 yuan/ton stronger than on August 18. In the same period of 2021, the PTA spot price discounted the futures 2201 contract by 63-68 yuan/ton. There is a huge difference between the high spot premium in early September 2022 and the spot discount in early September 2021.
8. The United States has strong demand for oil blending and tight PX supply.
In the context of the conflict between Russia and Ukraine, the EU’s sanctions against Russia are increasingly intensifying, and Russia’s refined oil exports are greatly restricted. In June, with the arrival of the peak self-driving season in the United States, the demand for refined oil increased sharply. Although U.S. refineries are actively producing, the country’s oil blending raw materials are limited, so the United States still needs to rely on imported more oil blending raw materials.
The increase in demand for gasoline in North America has accelerated the conversion of aromatic production from disproportionation to oil blending. The economic benefits of aromatic oil blending are significantly better than the production of PX. In addition, reformate, toluene, xylene and other products are used to blend gasoline. The supply of raw materials has decreased, and the supply of PX in North America has continued to be tight, causing prices to soar. On June 20, the price of PX in the United States was as high as US$2,014/ton, which was higher than US$713/ton in the Asian market.
9. PX futures preparation for listing
In recent years, based on the successful operation of PTA futures, Zhengzhou Commodity Exchange has implemented opening up to the outside world, listed PTA options and short fiber futures, and continued to build a risk management tool system for the polyester industry chain. The synergy of the sectors has gradually emerged, and the market size has gradually emerged. and operational quality have been steadily improved, and service industry capabilities have been further enhanced. At the 2022 China (Zhengzhou) International Futures Forum Polyester Industry Sub-Forum, Yu Xuefeng, deputy general manager of the Zhengzhou Commodity Exchange, said in his speech that the rules and systems will continue to be improved to promote the introduction of warehouse delivery for short fiber futures. Strengthen the research and development of new varieties, strive to promote the listing of PX and bottle flake futures, further improve the product tool system, and better support the high-quality development of the polyester industry. Strengthen the expansion of PTA futures overseas markets, provide risk management services to more international customers, and enhance the international influence of PTA futures prices.
10. Jiujiang Petrochemical PX was put into production
Jiujiang Petrochemical’s aromatics project is a key project in the national industrial layout. As the first large-scale aromatics project in central my country, its completion and commissioning will play an important role in promoting the rise of central my country and leveraging the development of the integrated refining and chemical industry chain. The aromatics complex unit started construction on May 9, 2020, and achieved high-standard construction on January 20, 2022. On June 8, 2022, Jiujiang Petrochemical’s 890,000 tons/year PX unit, the first industrial application device of Sinopec’s third-generation aromatics technology, was successfully started up and produced qualified products.
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