Overnight, the main contracts of U.S. crude oil and Brent crude oil both strongly exceeded the $110/barrel mark, SC crude oil continued to rise by the limit, and the polyester chain in chemicals remained strong. PTA rose again by more than 6% after hitting the daily limit, at 6,278 yuan, while staple fiber and ethylene glycol rose by 4.98% and 6.39% respectively.
The destructive power of the Russia-Ukraine war has continued to amplify over time, and its impact has begun to truly affect the physical market from the initial geo-risk premium. Yesterday, the discount of spot prices in the Middle East skyrocketed again. Due to sanctions and other reasons, Russian crude oil appeared. Substantial supply has fallen sharply, and demand for energy from other regions has risen sharply. There is an atmosphere of panic buying goods in the spot market. In addition, the OPEC oil-producing alliance led by Saudi Arabia and Russia agreed to increase oil production in April by 400,000 barrels per day in accordance with existing plans. The OPEC meeting lasted just 13 minutes, breaking last month’s record for a brief meeting.
The significant strengthening of the cost side boosted the performance of the downstream polyester chain. Yesterday, EG’s main 05 contract was close to the daily limit. Crude oil prices have risen sharply, raising the cost of oil-to-ethylene glycol units. Although the operation of domestic ethylene glycol units is acceptable, overseas ethylene glycol units, especially those in Japan, South Korea and Iran, are shutting down more and contract shipment suspensions are expected to increase. 3- Arrivals will drop sharply in April. EG accumulated library is expected to be revised significantly. In the spot market, market sentiment has improved, basis has strengthened, and monthly spreads have strengthened.
The oversupply characteristic of the PTA industry determines that its price will run around the cost line for a long time. In addition to cost reasons, PTA’s improvement in supply and demand at the end of yesterday was also one of the reasons for the daily limit. Currently, PTA processing fees are at a low level. Due to widespread losses in the industry, some PTA manufacturers have planned to reduce production and reduce burdens, and it is not ruled out that more devices will join the ranks of maintenance, causing a contraction in the PTA supply side. Driven by costs, downstream speculative demand has been stimulated again, and the market has increased significantly. At present, the downstream polyester load remains at a high level, and polyester production and sales have broken through. Among them, polyester filament production and sales accounted for 134.20%, and polyester staple fiber production and sales accounted for 111.98%.
In terms of terminal weaving, due to factors such as the epidemic in Jiangsu and Zhejiang and the difficulty of workers returning to work, the terminal weaving industry has been slow to resume work after the Spring Festival, which directly led to the backlog of upstream polyester inventory. Judging from market feedback, there are only a small number of spring and summer orders domestically, and most of them are orders before the Spring Festival. However, the demand for gold, silver and silver cannot be overly bearish.
Ren Junchi of CCB Futures said that looking forward to the market outlook, some major manufacturers have announced maintenance plans for April, and the market’s concerns about future PTA inventory accumulation have weakened. The actual PTA inventory accumulation in April will be lower than market expectations, and the PTA supply and demand pattern is still good.
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