Last week, the PTA futures price oscillated weakly, the spot price was relatively firm, and the basis spread widened significantly. At present, PTA is greatly affected by the “drag” of cost and consumer demand. With the recent weak oil prices, the demand for PX oil adjustment has been significantly reduced, and the cost-side support is far less than that from June to July. Upstream profit transfer has weakened as a whole, and PTA processing fees have recently recovered to around 654.62 yuan/ton. The overall valuation is neutral.
The pattern of PTA supply being strong in the near term and weak in the far term, with strong supply and weak demand has not changed, which is mainly reflected in the widening of the 9-1 contract price spread since August. On the one hand, PTA equipment undergoes frequent maintenance and heavy losses. From July to August, PTA maintenance losses remained high. The increase in maintenance of major manufacturers and the purchase of spot goods by suppliers will have a short-term boost to PTA prices. According to the currently announced maintenance plan, the maintenance volume in September is expected to be the same as in August. On the other hand, PX load is on the low side, import volume rebounds month-on-month, but it still takes time, and the short-term raw material tension is difficult to alleviate for the time being. As of September 2, PTA’s weekly load dropped to a low of 67.2%. PTA continues to destock under low operating conditions. As of September 2, PTA social inventory is 1.985 million tons, and polyester factory raw material inventory is about 4.9 days. The current inventory is at the mid-season level, and the inventory pressure is not great. At the end of August, suppliers started buying warehouse receipts, and the number of warehouse receipts has decreased significantly recently.
In the medium to long term, PTA faces greater inventory pressure. 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.
In terms of downstream polyester demand, weak terminal consumption 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 weighted inventory of polyester last week was 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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