As oil prices continue to fluctuate at high levels, high cost pressure will gradually shift downward along the industrial chain, which is expected to increase the production costs of many chemical products. However, the closer the chemical products are to the terminal, the more difficult it becomes to move down the cost. The cost transfer can only be absorbed through its own links. Over time, many products that cannot transfer the increased cost will suffer losses.
PTA is a product that attracts a lot of attention in the industry, not only because it is a highly active product in chemical futures, but also because the PX-PTA-PET industry chain has a wide audience, which has led to widespread industry attention on the market situation of PTA.
PTA re-tests the 6,000 mark. High cost pressure cannot be transmitted to the polyester end.
Since hitting a low of 5,208 yuan/ton on July 15, PTA prices have experienced a strong rebound. The main 09 contract has increased by more than 15% in nine trading days. The price has re-tested the 6,000 mark, leading the increase in chemical products.
Although PTA has experienced a periodic increase, from a full-year perspective, high cost pressure has never been transmitted to the polyester end, resulting in PTA production losses. In the past year, PTA production by private enterprises has been at a loss most of the time, with losses exceeding 1,000 yuan/ton in certain periods. By 2022, the average PTA production loss of private enterprises is close to 700 yuan/ton, and there is almost no profit.
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. However, downstream demand is in the off-season, polyester and terminal demand are weak, and factory inventory pressure is high. The sluggish demand will bring certain negative effects to the PTA market. 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.
Since the beginning of this year, the polyester market, especially polyester filament inventory, has seen an obvious and continuous accumulation of inventory. From June to now, the inventory of short fiber and bottle flakes has also shown a continuous accumulation of inventory, and the terminal weaving link has recently been in Jiangsu and Zhejiang regions. Construction will continue to fluctuate at a low level due to high temperature and power rationing. There is a certain negative feedback on the upstream PTA market.
The production capacity growth rate will reach 16.91%. In the future, the PTA processing margin will continue to drop from the existing 400-600.
At the same time, multiple large-scale devices in the PTA industry will be put into operation in 2021, with a total production scale of 8.6 million tons and a production capacity increase of 15.08%. 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%. There is a vacuum period for production in the third quarter, and subsequent production capacity is mainly concentrated in the fourth quarter. Considering the profit side, the PTA processing gap will still be compressed in the future, and will continue to drop from the existing 400-600. Large-scale equipment has 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.
For the future, the PTA industry is currently accumulating systemic risks. Continued losses will lead to serious operating difficulties for PTA manufacturing companies. They will inevitably choose to suspend production and wait for the market to reduce supply to correct market performance. In the future, PTA parking companies will continue to increase. , supply is expected to decrease significantly. This move may stimulate the market to ease, but for the PTA industry to turn a profit, a deep correction in the crude oil market will be needed.
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