The market’s overall risk appetite rebounded last week, especially after oil prices stabilized and rebounded, and the polyester chain strengthened again. On the 15th, the trend of PTA and short fiber was still relatively strong. PTA reported 5,664 yuan, up 1.11%; short fiber rose 0.79%.
Economic data released during the week showed that U.S. inflation pressure has decreased and some data showed economic resilience. International oil prices returned to US$90 as commodity risk appetite further rebounded. Due to the tight supply of upstream PX, PTA load remains low, and cost and supply support remain. Short fiber also followed the positive trend and made up for the previous decline. Due to limited changes in supply and demand, it is more susceptible to cost-side guidance.
PTA processing fees remain low. Due to intensifying losses, 27.35 million ton devices, including Fuhaichuang’s 4.5 million ton device and Yisheng’s three 10-million-ton devices, were shut down for maintenance or load reduction in July. Domestic PTA operating load continues to be less than 70%. Most of the devices that were overhauled in July will resume production or operate at full capacity from the end of July to early August. Hengli Petrochemical 3# and Fuhai Chuang are expected to restart next week.
At present, domestic polyester inventories are high, and companies are under great pressure to destock. Since terminal demand has not been followed up, polyester companies have been forced to cut prices to remove inventory. This has led to continued compression of polyester company profits. In addition to bottle flakes and industrial yarns, polyester filaments and staple fibers are basically in a break-even state. Under such circumstances, domestic polyester companies are less motivated to produce, and Jiangsu and Zhejiang have issued orderly power consumption policies for some textile bases to cope with peak power shortages. The polyester end still has insufficient support for the upstream. However, as the weather turns cooler in late August, if consumption can pick up, the impact on the industrial chain may change from a drag to a neutral one.
The short-term supply increase is limited, the superimposed spot processing fee is low, and there is some support for short fiber prices. However, the market expects that fundamentals will still show a trend of increasing supply and demand and decreasing demand. After mid-July, the downstream yarn procurement capacity was weak, and its own finished product inventory continued to accumulate. At present, the output of short fiber has been at a high level in the past three years, and is showing a reverse trend with 2021. From the later production plan, the supply increase is obviously expected.
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