The decline in polyester chain futures has eased recently, and ethylene glycol even bucked the trend last week.
What are the reasons why ethylene glycol performs better than PTA and short fiber disks? How is the current performance of the polyester link and terminal weaving, and what impact will it have on the future trend of the main staple fibers? How will the recent cost-side changes affect PTA processing fees? What is the main logic of PTA in the future?
[Institutional consultation]: What are the reasons why ethylene glycol rose against the trend in the rising week and performed stronger than PTA and short fiber?
Founder Mid-Term Futures Feng Xiaofen: Recently, under the influence of macro risks, ethylene glycol has performed better than PTA and short fiber. This is mainly because the current efficiency of ethylene glycol is not good, and many units have announced load reduction maintenance or delayed restart. News, such as: Hengli’s 1.8 million-ton unit is scheduled to be overhauled in late July, the Satellite Petrochemical’s 900,000-ton unit is scheduled to be converted to production at the end of July, the 828,000-ton unit in South Asia in the United States will be shut down on July 8, Jianyuan’s 260,000-ton unit, Yangzi Petrochemical The restart of the 300,000-ton unit and the Far Eastern United 450,000-ton unit was delayed, and the market expected supply to shrink in the future, boosting market sentiment and making ethylene glycol’s performance stronger than that of PTA and short fiber.
Guan Di from the Investment Consulting Department of SDIC Essence Futures: Ethylene glycol has performed relatively strongly in the past week, mainly because as prices have continued to fall since mid-June, losses in various ethylene glycol process routes have intensified, and factories have increased maintenance plans due to efficiency issues. And the phenomenon of delayed restart of early maintenance equipment. The supply reduction is expected to add up to the low arrival volume in the near future, the high port inventory has been reduced slightly, the early short positions have been reduced in recent days, and the price of ethylene glycol has bottomed out and rebounded. There is some room for repair of the current low valuation. However, the currently announced equipment maintenance plans are concentrated from the end of July to early August, and the actual destocking of ethylene glycol is mainly in August. In the near future, trading expectations are still the main focus, and it is expected that the short-term rebound rhythm may still be repeated.
[Institutional Consultation]: How is the current performance of the polyester segment and terminal weaving, and what impact will it have on the main trend of short fiber in the future?
Founder Mid-term Futures Yu Yangfeng: Since the beginning of this year, affected by the trade pattern, domestic epidemic situation and raw material costs, terminal weaving demand has been weak, and the industry’s profitability has been poor due to the accumulated inventory of finished products. Due to poor terminal demand and high costs, the polyester industry is under pressure. Processing fees are low, and finished goods are overstocked. Coupled with the current high-temperature off-season, polyester companies have successively begun to reduce load and production to relieve inventory pressure. For short fiber, July-August is the traditional off-season, and the inventory of downstream pure polyester yarn and other finished products is high, so the demand for short fiber will still be weak. September-October is the traditional peak season, and the demand for short fiber is expected to improve month-on-month. However, domestic textile and apparel demand is recovering slowly, and overseas orders are being diverted to Southeast Asia. Terminal textile and apparel demand is expected to pick up month-on-month, but there is no expectation of significant improvement. At the same time, attention needs to be paid to whether the United States can substantially cancel the tariffs previously imposed on Chinese goods. If it is cancelled, it will boost the export of textile clothing and hats and drive demand for short fibers. Generally speaking, the supply and demand of short fiber are weak, processing fees will remain low, and absolute prices are still driven by costs.
Guandi, Investment Consulting Department of SDIC Anxin Futures: Under the pressure of high inventory and low profits, major polyester factories have gradually implemented production reductions. The polyester load has dropped below 80% this week, mainly focusing on filament maintenance and load reduction. In the off-season of demand, terminal orders have not yet shown significant improvement, and texturing and loom operating rates have continued to drop slightly to around 50%. During the downward trend of the cost end, terminal stockings were cautious and there was a lack of speculative demand, and the accumulation of inventory in the polyester segment continued. In terms of downstream short fiber yarns, the cash flow of pure polyester yarn is still at a low level, finished product inventory continues to accumulate, some yarn mills are more willing to reduce production, and demand is difficult to improve in the short term. In the early stage, due to the tight supply of goods in some areas, the basis gap continued to strengthen due to higher prices by short fiber factories, and the spot processing gap of short fiber has also been repaired. However, with the restart of Shanli, Jinlun and other devices in early July, the supply of short fiber increased significantly in July, and the increase in supply and demand is weak. It is expected that the pressure on short fiber accumulation will increase, and the processing gap may fall again.
[Institutional Consultation]: How will the recent cost-side changes affect PTA processing fees? What is the main logic of PTA in the future?
Founder Mid-term Futures Feng Xiaofen: Since June, driven by the strong demand for refined oil products, PX prices have fluctuated greatly, which once led PTA out of the roller coaster market. Recently, as the marginal demand for gasoline and diesel has slightly weakened, the supply of domestic PX has gradually increased. With the increase, PX has experienced a significant decline both in terms of absolute price and processing fee level. We can see from the recent price trends that the price fluctuation range of PTA lags behind the fluctuation range of PX. When PX falls sharply, the profits from the PX side gradually shift to the PTA side. However, when PX rises sharply, the PTA processing fee is again compression. In the short term, the large fluctuations in PX prices will still have a certain impact on PTA processing fees. However, as PX gradually returns to rationality, it is expected that the impact of the cost side on PTA processing fees will gradually fade, and the logic of the impact of PTA processing fees will gradually return to its own supply and demand. Fundamental changes. Recently, Fuhaichuang’s equipment has been shut down for maintenance, and PTA supply and demand have shifted from a wide balance to a tight balance. However, considering that the current processing fees are acceptable, it is expected to have little impact on PTA processing fees, and the absolute price will still follow the cost end.
Guan Di, SDIC Essence Futures Investment Consulting Department: Recently, with the weakening of overseas oil adjustment logic, the PX processing gap has continued to fall. With the profit concession of PX, PTA processing fee has been restored to above 500 yuan/ton. On the supply side, Sichuan Energy Investment and Luoyang Petrochemical have restarted one after another, but Fuhai Chuang plans to stop operations this week, and the PTA operating rate in July is expected to remain at a low level. At the same time, the maintenance of Hengli and Fuhai Chuang has caused the market’s spot supply to remain tight, and the TA basis may remain strong. On the demand side, polyester high inventory pressure still exists. In the off-season of seasonal demand, negative feedback continues. PTA as a whole shows a weak balance between supply and demand. Its basic impact on the market price is small. In the future, it will still pay attention to the crude oil and PX. Changes mainly occur on the cost side. In the short term, the rebound in original prices will support PTA prices, but in the medium to long term, with the end of the peak season for overseas refined oil demand, aromatics valuations are still at risk of continuing to fall.
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