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.
In 2022, the PTA industry will continue to expand its capacity at a rapid pace, with an estimated total production capacity of 11.1 million tons put into production. Based on the existing total production capacity of 66.23 million tons, the production capacity growth rate will reach 16.91%. In the first half of this year, only 3.6 million tons were put into production, and due to the large-scale maintenance of PTA equipment, the growth rate of PTA output is smaller than the growth rate of production capacity, basically maintaining a tight balance. In the second half of the year, the main production of PTA will be concentrated in the fourth quarter, and the pressure on production expectations is highlighted.
The pace of PTA production is far from stopping. According to statistics, large-scale PTA devices will still be launched from the second half of 2022 to 2023, with plans to add 7.5 million tons of new production capacity. In 2023, PTA production capacity is expected to increase by 31.2 million tons.
In the medium to long term, PTA faces greater inventory pressure. From a profit perspective, PTA processing margins will continue to shrink in the future, and large-scale equipment will have obvious competitive advantages. Assuming that more than 10% of backward production capacity will be withdrawn every year from 2021, the market share of the top five companies in terms of industry concentration and business scale will reach about 63%. The leading refining and chemical integrated enterprises in the industry can make good profits based on their cost advantages and large production capacity when the industry is in overall surplus. However, small production capacities with high costs, such as less than 1 million tons, will be subject to bankruptcy liquidation and supply-side reform. way to exit the industry.
In the near future, in terms of downstream polyester demand, weak terminal consumption has suppressed polyester load. In the early stage, major polyester manufacturers jointly reduced production, and the raw material side of the superimposed cost weakened. The comprehensive load of polyester increased, while the high inventory level fell marginally, and factory profits also recovered. However, the terminal weakness continues, and polyester load is difficult to rebound significantly. As of September 2, the comprehensive load of polyester was around 84%, increasing week-on-week. In terms of inventory, the recent weighted inventory of polyester has been 23.7 days, a slight decrease week-on-week. The inventory of polyester finished products is high and the pressure is difficult to alleviate. Recently, the overall production and sales of polyester yarn in downstream Jiangsu and Zhejiang have increased, and the demand has shown an improvement trend. As the weather begins to turn cooler and power restrictions are further relaxed, the machine load of polyester factories is expected to gradually pick up.
Judging from market sentiment, downstream demand has been weak for a long time, and the market has a strong willingness to improve. The key to solving the current predicament of polyester lies in the improvement of terminal demand and the increase in orders for autumn and winter textile clothing. If there is no significant boost in terminal consumption, the situation of high inventory and low production capacity at the polyester end will be difficult to be substantially improved. At present, terminal consumption has gradually entered the traditional peak season, and orders for autumn and winter have begun to be placed. The market has certain expectations for the recovery of end consumer demand. However, judging from the current global macro consumption background, overseas inflation has intensified, the Federal Reserve continues to raise interest rates, U.S. textile and clothing inventories have peaked, demand for replenishment has declined, and overseas orders are expected to be lower than those in the first half of the year. ; Domestic orders are expected to be repaired but space is limited. Judging from this, domestic demand may be greater than exports as the driving force for terminal consumption in the second half of the year, but the overall expectations are not good.
To sum up, the strong cost support on the cost side has obviously weakened. In terms of crude oil, as the demand for oil adjustment weakens, the arbitrage window of PX America and Asia is closed, and the boosting effect of PX weakens significantly. The current PTA supply pattern is relatively strong but far from weak, and polyester demand and end-use textile and clothing consumption remain weak. In the short term, PTA operates at a low operating rate due to high maintenance volume and shortage of raw materials. However, in the medium and long term, the production pressure in the fourth quarter combined with the return of early equipment has highlighted the supply pressure of PTA. Therefore, the tight supply of PTA may continue in the short term, and both the cost side and fundamentals are expected to weaken in the medium and long term.
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