Since December, the PTA market as a whole has shown a volatile upward trend, with market prices rising. As of Wednesday’s close, the main PTA futures contract closed up 2.11% at 5,138 yuan/ton, with the highest intraday price reaching 5,226 yuan/ton. From a long-term perspective, in the past 11 trading days, the main PTA contract has closed positive 9 times. The intraday high of 5226 on the 5th has increased by approximately 15.42% from the intraday low of 4528 on December 21.
Recently, we learned that Fuhaichuang’s 4.5 million tons/year PTA unit will start maintenance for three weeks on January 3. Will there be another wave in the market? As the Spring Festival approaches, terminal companies are facing production cuts and shutdowns, but the cost side is relatively strong. Under the game of cost and supply and demand, how should the PTA market be interpreted?
Fuhaichuang 4.5 million tons/year PTA device maintenance
Impact geometry?
PTA equipment fluctuated more frequently in December. Yisheng Chemical’s 6 million tons and Yisheng New Materials’ 3.6 million tons units started and stopped during the month; Fuhai Chuang’s 4.5 million tons unit operated with reduced load; Hengli Petrochemical 2#2.2 million tons, Yadong Petrochemical 750,000 tons, Zhuhai BP1.1 million tons, Fujian Baihong’s 2.5 million tons unit entered maintenance. The downstream polyester terminal load remained at normal levels. At the end of the month, PTA pre-parking companies gradually resumed and restarted, and construction starts increased. Near the end of the year, some companies in the polyester factory have plans to reduce their load.
On the demand side, the output of the polyester industry in December was 4.7328 million tons, a month-on-month increase of 0.64%. The average monthly load was 83.16%, down 2.5% from the previous month. The main reason for the different output and load trends in the industry is that due to poor demand performance, some companies reduced production and performed maintenance at the beginning of the month. Coupled with the early Spring Festival this year, some companies also joined the production reduction queue at the end of the month. Overall, PTA’s recent rise is driven by costs (rising crude oil + expected processing fee recovery due to supply contraction). At the end of the month, the equipment was gradually restarted, and the overall PTA operation gradually increased to 81.09%. In January, except for Fuhai Chuang, there is no maintenance expected for other equipment.
According to the calculation of the restart and maintenance of domestic PTA devices, the monthly supply of domestic PTA increased to 4.7821 million tons in January 2022. The specific situation of device maintenance still needs to be paid close attention to. Looking at the demand side in January 2022, the end of the month coincides with the Spring Festival holiday. As terminal factories are on holiday one after another, polyester factories are also reducing production and conducting maintenance. It is expected that polyester output in January 2022 will continue to be higher than that in December 2021. decline.
Overall, PTA’s construction start-up fell first and then rose during the month. The current start-up has risen to 77.69%. The Yadong Petrochemical, Honggang Petrochemical and Zhuhai BP units will be restarted in the future, while Fuhai Chuang’s 4.5 million tons will undergo maintenance in early January. The maintenance and The restart has been somewhat hedged, but the overall supply has returned to a state of accumulated inventory from a slight destocking.
Big Mac equipment maintenance is difficult to change, the market is weak at the end of the year
Negative feedback will gradually be transmitted upstream
Recently, PTA has been able to rise well. The reason is that the strong operation of cost-end crude oil is still the main driver of the recent rise in PTA prices. Specifically, although concerns about the Omicron virus variant still exist, and the Iran nuclear deal negotiations will be restarted again, the decline in U.S. crude oil inventories is good for fermentation, and market concerns about the Omicron virus variant continue to ease, while European energy supplies Risks still exist. Coupled with production interruptions in some oil-producing countries, the crude oil market has risen for four consecutive days. WTI rose from US$65.75/barrel at the beginning of the month to US$76.99/barrel at the end of the month. Brent crude oil rose from US$68.87/barrel at the beginning of the month to US$76.87/barrel at the end of the month. US$79.32/barrel. And from the perspective of direct raw material PX, the price of PX in Asia fluctuated higher in December. The price of CFR China Taiwan/Mainland rose from 815 US dollars/ton at the beginning of the month to 879.33 US dollars/ton. Domestic PX production starts declined, and the overall supply narrowed. It can be seen that the cost side has a negative impact on PTA. The market is strongly supported upward. Optimism has made crude oil prices slightly stronger, and PTA costs have strong support.
However, in the later period, PTA’s own supply-side pressure will still exist, and seasonal inventory accumulation may remain in the first quarter. At the same time, as the Spring Festival approaches, some polyester plants have begun to reduce production, and the polyester load is expected to gradually decline. In terms of terminals, domestic demand has entered the Spring Festival holiday ahead of schedule, the overall performance of orders is weak, terminal inventory has accumulated, and negative feedback will gradually be transmitted to the upstream.
All in all, despite the gradual weakening of PTA supply and demand, the current spot market liquidity is still not loose, and the superimposed oil price and PX trends are stronger, and the short-term PTA trend is stronger. However, considering that downstream polyester profits have been compressed to low levels, the upside potential of PTA will be limited to a certain extent. Pay attention to oil price trends and changes in PTA spot liquidity.
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