Overnight, U.S. crude oil fell to near $100. The conflict between Russia and Ukraine eased slightly. Both sides said that negotiations may have results in the next few days. Concerns about crude oil supply shortages have declined, and early high-risk premiums have retreated. Chemical futures continued to show green, with polyester chain still leading the decline, with PTA falling 4.52% to 5,700 yuan. Staple fiber and ethylene glycol fell 4.55% and 4.17% respectively.
As cost prices further rise, PTA’s profit margins shrink. Calculated based on the industry’s average processing cost of 600 yuan, the average profit level of PTA was once negative last week. In the short term, companies may have stocks in stock during the actual production process, but if the PTA processing gap continues to decline, PTA device maintenance will gradually surface. At present, the maintenance of PTA equipment is gradually becoming clear. Some of Yisheng’s equipment have begun maintenance one after another. Hengli also has maintenance plans from March to April. Fuhaichuang also reduced its load in early March. The supply side has begun to shrink, and the market has gradually begun to destock.
Staple fiber cost support is strong, processing fees continue to be low, and factory cost burdens are heavy. Some polyester staple fiber companies have successively announced maintenance. Yida plans to stop all operations over the weekend, and Sanfangxiang plans to reduce production by 200,000 tons/year. The market next week The shrinkage is expected to be obvious; in terms of demand, the situation of new orders in the downstream pure polyester yarn market has not improved significantly. Terminal buying is still dominated by rigid demand and hedging orders, and downstream procurement is still generally cautious.
The condition for the end of this round of EG’s rise is that crude oil prices turn downward. Even when the polyester unit maintains high operating capacity (near 93%) and overseas MEG order shipments are frequently canceled, MEG port inventories are still increasing. However, in order to cope with the deteriorating cash flow situation, many companies have taken the initiative to reduce their burdens or directly stop operations. According to the current crude oil price, the integrated ethylene glycol unit is still at a loss, and some integrated plants have recently begun to make some adjustments to reduce the load. At the same time, Guotai Junan Futures believes that the chemical industry chain will have to face the problem of high costs and low profits brought about by high oil prices for a long time. The short-term correction does not mean that the absolute price of EG will turn around.
On the demand side, as polyester factories did not undergo major maintenance before and after the Spring Festival holiday, and terminal demand was insufficient, the overall inventory pressure continued to increase. Returning from February, the overall load of polyester ends continues to rise. Factories have also conducted price reductions and promotions many times to release inventory pressure. High costs and low profits support prices, but high inventory and low demand still inhibit its upside.
In terms of terminals, the overall situation has improved month-on-month, export orders have rebounded, and domestic demand has been weak year-on-year. Orders in the weaving process are recovering, but the current inventory situation is relatively chaotic. Some factories have kept raw materials in storage for 2-3 months, while some factories are more cautious and only have 2-3 days of inventory. Overall, the difference in everyone’s enthusiasm for stockpiling mainly comes from the judgment of future oil prices.
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