PTA, which had been tepid for nearly a whole year last year, finally made major breakthroughs in a row, driven by the recent rise in crude oil, and short-term futures prices continued to refresh. On March 2, driven by the surge in international oil prices overnight, the domestic commodity futures market generally closed higher.
PTA also saw a rare daily limit, with the main contract TA2205 rising 6.02% to close at 5,988 yuan/ton, a new high since May 20, 2019.
This round of rise in PTA is inseparable from the support of frequent increases in raw material prices and processing costs. Although high downstream inventory is still the heaviest price-pressure anchor for PTA, the recent positive demand for downstream construction and the timely offset of installation shutdowns have strengthened the momentum. Long-term PTA still exists in the short term.
How can I stand losing money every day?
Some PTA factories announce maintenance plans
In March, as the raw material end of PTA, the prices of both naphtha and PX rebounded smoothly. In terms of crude oil, as the situation between Russia and Ukraine continues to escalate and Russian banks are excluded from the SWIFT payment system, concerns about global energy supply continue to grow. U.S. crude oil and Brent crude oil rose sharply overnight, with the main contracts strongly exceeding the $100/barrel mark, thus pushing up the cost of PTA.
With the help of crude oil, the prices of PX and naphtha were quickly restored. On the other hand, PTA’s processing fees have been severely squeezed. However, with the surge in raw material prices in recent days, PTA factories have suffered losses and maintenance equipment has also appeared. Increase.
PTA production companies will flexibly adjust device dynamics due to processing fees. In the stage of capacity expansion, the fluctuation range of PTA processing fees is limited. Currently, it can be estimated based on the industry average processing cost of 600 yuan/ton. That is to say, if the processing difference rises to more than 600 yuan/ton, companies with processing fees of around 500 yuan/ton will increase their burden or restart due to the increase in processing difference; if the processing fee drops to below 300 yuan/ton, For refining and chemical integration and some large-scale units, the processing fee is barely maintained, but for old units, they are in a state of loss, and the probability of maintenance and load reduction is significantly higher than that of integrated units.
Since February, under the influence of geopolitics, the prices of crude oil and PX have risen sharply. Under the pressure of high inventory and accumulated warehouses, the spot price of PTA has not increased enough. The PTA processing fee has been compressed from a high of 687 yuan/ton in early January to a low of 687 yuan/ton on March 1. 220 yuan/ton, showing a trend of continuous compression. With low processing fees, the losses of the PTA industry have intensified. Recently, some PTA factories have announced maintenance plans. For example, Zhuhai BP, Yizheng, and Hengli have also announced their PTA maintenance plans in March and April. Fu Chemical announced its plan to reduce load operation in March. With the increase in equipment maintenance, the monthly supply of PTA in March dropped significantly than expected, showing a difference from expectations. If the maintenance is carried out in March, the entire inventory will be destocked, and the destocking will be concentrated in the middle to late period.
The market expects the launch of foreign trade orders in mid-March
In the short term, polyester yarn just needs to be digested faster
At present, the strong pattern of crude oil remains unchanged, and PTA cost support is strong. Polyester inventory is backlogged, but with the increase in terminal weaving load, the oversupply contradiction is expected to be alleviated.
In terms of downstream demand, the downstream market gradually recovered after the holidays and the start-up of equipment also increased to varying degrees. The weekly output of the polyester industry in the last cycle was 1.1577 million tons, a month-on-month increase of 1.67%. The polyester industry’s weekly average operating rate was 90.62%, up 1.49% month-on-month. The equipment load of downstream weaving factories has gradually returned to normal production. Judging from the downstream start-up situation, water-jet and air-jet looms are currently performing well, but the mainstream market still shows a lack of new orders, squeezed profits, and poor enthusiasm for starting operations. Market participants are looking forward to the launch of foreign trade orders in mid-March. Since the 3rd, polyester prices have also risen to varying degrees as raw materials have risen. The production and sales of polyester yarn are increasing, and the speed of digestion is urgently needed.
To sum up, rising raw material prices and rising costs are the key to this round of surge in PTA. The short-term situation between Russia and Ukraine is difficult to alleviate. The cost side is supported by rising oil prices. At the same time, due to the unexpected load reduction of some units, supply-side compression also provides support for rising market prices. The polyester end load on the demand side has increased, and it is just needed to support the strong operation of TA prices. However, the geopolitical situation is changing rapidly, and we must also be alert to the risk of a correction in international oil prices. In terms of operations, it is recommended to focus on long operations when the price falls back.
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