The international situation is tense and has attracted global attention. The competition between energy giants has caused an earthquake in the market. And misfortune never comes singly, a large U.S. oil refinery suddenly exploded at this critical moment! There has been a huge earthquake in the upstream raw materials. What will happen to the polyester market next?
Geopolitical situation worsens
Crude oil’s “100-yuan sprint”
Since the beginning of 2022, crude oil has continued to rise. Recently, due to the escalation of the Russia-Ukraine dispute, frequent news and increased market operations, crude oil has once again entered the “100-dollar sprint” track.
From February 21st to 22nd, Russia and Ukraine took further actions respectively. Energy market transactions began to be chaotic, and the rise of crude oil was almost out of control. Although crude oil and raw materials in the industrial chain are well supported, the situation has changed too quickly. We still need to continue to pay attention to the dynamics of both parties and the attitudes of Northern Europe and the West to determine the future market trend.
According to the crude oil list of Oriental Fortune.com, Brent crude oil futures exceeded 97 US dollars per barrel on February 22, setting a new high since 2014! The share prices of related energy and petrochemical companies have risen. Among them, the share price of Saudi Aramco, the world’s largest oil company, hit a record high since its listing, exceeding 40 Saudi riyals (approximately US$10.67) during the session.
Misfortunes never come singly
Sudden! Explosion at large US oil refinery
But misfortunes never come singly, and a large U.S. oil refinery exploded at this critical moment!
It was learned that an explosion and fire broke out at Marathon Crude Oil’s (MPC.US) refinery near New Orleans, Louisiana, on Monday local time. In a situation where inflation is already rampant, the incident may further affect fuel supply and push up prices.
Marathon Crude’s Garyville, Louisiana, plant is one of the largest in the United States and a major supplier of gasoline, diesel and other fuels. The Garyville refinery has a refining capacity of 578,000 barrels per day and is one of the largest refineries in North America. The refinery also processes refining-grade propylene and key resin feedstock polymer-grade propylene and propane. The company reported that the fire broke out around 9:30 a.m. local time and was extinguished about four and a half hours later.
The fire started at a hydrocracking unit, which breaks down heavy oil molecules into lighter products such as diesel, and if any damage is severe enough to shut down the Garyville plant, fuel supplies to the region would May tighten. The company reported that the fire broke out around 9:30 a.m. local time and was extinguished about four and a half hours later. The fire injured five employees, four of whom were treated at the scene and one was sent to the hospital. The explosion and fire are currently under investigation.
Demand has been rising at a time when more than 10% of Gulf Coast refining capacity is idle for repairs and other maintenance work. Affected by news of the fire, benchmark gasoline futures once rose 1.6%. According to data from the American Automobile Association (AAA), retail gasoline prices have increased by 7.5% this year, based on a 46% increase in 2021. The last time gasoline prices reached such high levels was in the summer of 2014, when international oil prices exceeded $100 a barrel.
Polyester raw materials rise in the wind
Be wary of market downside risks
The oil price approaching 100 yuan directly caused restlessness in the downstream. On February 22, the domestic commodity futures market was mixed. In terms of increase, fuel oil increased by more than 7%, asphalt increased by more than 6%, crude oil increased by more than 5%, low-sulfur fuel increased by more than 4%, and PTA increased by more than 2%;
The pressure on the upstream is released, and the midstream and downstream can only respond by raising prices. As crude oil reaches the $100 mark, the cost side of polyester will also be significantly supported. It is expected that polyester filament will stop falling and recover in the short term with the support of raw materials, but attention needs to be paid to terminal orders and polyester filament production and sales.
However, the current market seems to be improving, but in fact there is an undercurrent. As crude oil prices rise, downstream chemical industries and other industries are facing increased pressure. The oversupply pattern of most chemical products is difficult to change. Cost support alone cannot reverse the cautious pricing mentality of factories, and constraints on downstream demand remain. It is expected that under high upstream prices, traders and manufacturers will bear greater cost pressure, which will be difficult to transfer to the downstream terminals, and the growth of the chemical market will be restrained. In addition, the state’s measures to guarantee prices and stabilize supply continue, and it is difficult for “sky-high-priced raw materials” to come out of the market. You should not blindly follow the rise and be wary of the market’s downward risks.
</p
