In terms of PTA, there is little pressure to put PX-PTA into production in the first half of next year. PX has almost no new production capacity to be put into production. In terms of PTA, there is only the new device of the second phase of Yisheng New Materials. The processing fees of PX and PTA should not be overly pessimistic. With the large-scale release of new production capacity in the second half of the year, the processing fees in the PTA market will once again face the test. In the future, older devices will lose their competitiveness and the market structure will be redistributed. The absolute price of PTA may fluctuate with the cost. The supply and demand situation is better in the first half of the year than in the second half. The fluctuation range of processing fees is expected to be between 250-600.
In terms of MEG, the marginal supply comes from coal-based equipment. There are still many coal-based equipment put into operation in new production capacity. The launch may be delayed, and the supply increase is not very optimistic. The production of MEG from naphtha is still the main cost line to observe. Four sets of integrated devices are planned to be released in the first half of 2022, and MEG supply pressure is high. The focus of ethylene glycol price fluctuations will follow the raw material market, paying attention to the fluctuations in oil and coal prices, as well as rebound short selling opportunities brought about by periodic strengthening of supply and demand.
In terms of short fiber, the indicators of downstream spinning mills are currently good, and the supply and demand of short fiber is still good in the industry chain. Processing fees may increase in the first half of 2022. In the later period, as supply and demand pressure increases, processing fees may fluctuate downward.
1. Review of the market conditions of the polyester industry chain in 2021
PX: PX production capacity continues to grow this year. In the first half of the year, only Sinochem Quanzhou’s 800,000-ton unit was released. Under the influence of periodic tight supply and demand, PX processing fees showed a certain rebound. The PX-naphtha price difference has been at The relatively strong range of $250-300. However, with the release of Zhejiang Petrochemical’s new equipment in July, the supply of PX increased. Coupled with the rise in oil prices and poor demand for PTA in the second half of the year, PX processing fees shrank significantly. Affected by profits in the fourth quarter, PX’s operating load was at a low level in recent years. The PX production capacity to be put into production in 2022 is still huge, thus inhibiting the improvement of processing levels. The mismatch in production capacity launch time between PTA and PX has become a key factor in the periodic fluctuations in processing fees. PX’s annual production capacity in 2021 has reached 29.61 million tons, with a production capacity growth rate of 13.6%. The cumulative output is approximately 21.48 million tons, and the output growth rate is less than 6%.
PTA: Suppressed by low processing fees in 2021, new production capacity will be less than expected, including the first phase installations of Fujian Baihong, Honggang Petrochemical and Yisheng New Materials. In the first quarter, the market continued the enthusiasm for demand growth in the post-epidemic era last year in the fourth quarter, and the price center continued to rise. However, after the Spring Festival, as the supply of two new sets of equipment was reflected, PTA processing fees narrowed significantly. Under low profit conditions, manufacturers increased maintenance from March to May, and PTA prices entered a period of range consolidation. Downstream orders are still insufficient after July, but the strong oil price has brought certain support to the cost side. Coupled with the unexpected increase in summer installations, the industry’s operation is not high, and the overall price of PTA has increased. Under the policy of limiting production and electricity from September to October, the supply and demand pattern of PTA guided the market in stages, and futures prices in the second half of the year followed an “M”-shaped trend. In terms of basis trends, except for July-August, when spot circulation was tight and the basis was positive, the basis was negative for most of the year. At the beginning of the year, as futures were expected to go better, the spot discount was larger. Looking at the whole year of 2021, PTA has added a total of 8.6 million tons of new production capacity, with a production capacity growth rate of 14.9%. The cumulative output is approximately 53.17 million tons, with a year-on-year growth rate of approximately 6.9%.
MEG: In 2021, the price focus of ethylene glycol will follow the fluctuations of the raw material market. Port inventories remain at low levels throughout the year, and ethylene glycol prices are more flexible in price fluctuations. Throughout the year, ethylene glycol prices rose significantly twice. One was due to the cold wave in North America in the first quarter, which caused a large number of overseas installations to shut down, causing supply concerns; the other was in late September, when energy shortages prompted a sharp rise in the raw material market, and ethylene glycol futures prices Hitting the highest level since listing. However, as the supply and demand of thermal coal improves under state regulation, ethylene glycol prices have also fallen from highs. Recently, ethylene glycol has returned to the supply and demand side again. Although a lot of new production capacity has been released near the end of the year, due to poor profits, it will take some time to form a supply, which may not be reflected until the first quarter of 2022. For the whole year of 2021, MEG has added a total of 5.94 million tons of new production capacity, with a capacity growth rate of 37.5%, while output is approximately 12.12 million tons, an increase of 33.8%.
Polyester and terminals: Taking advantage of the improvement in demand in the post-epidemic era last year, polyester factories have maintained good operating conditions in the first half of the year. Although profits narrowed in the second half of the year and construction started was restricted by dual controls, the overall profitability of the polyester industry is still at a relatively good level in the industry chain, and the launch of new production capacity is also progressing steadily. Terminal domestic sales recovered weakly, and exports were acceptable in the first half of the year. In the second half of the year, affected by higher sea freight, the performance was poor.
Looking at the short fiber market, processing fees show an obvious situation of high first and then low. Processing fees rose in the first quarter, but amid poor demand follow-up, traders stocked up goods and found it difficult to sell, causing manufacturers to accumulate inventory. From July to August, due to the loss of short fiber production, industry maintenance increased one after another, and the dual control policy from September to October also made it difficult to effectively increase the start-up of short fiber. However, after a wave of passive supply tightening, short fiber profits increased. . A total of 800,000 tons of production capacity will be added throughout 2021, including 600,000 tons of cotton type. The production capacity growth rate is 9.7%. The cumulative output is approximately 6.77 million tons, which is the same as last year.Upload/News/image/2021/12/21/20211221092210_1215.png” />
From January to October, the social retail sales of clothing, shoes, hats, and knitted textiles above designated size increased by 17.4% year-on-year to 1,086.1 billion yuan, mainly due to the data deviating from the normal level during the epidemic last year. Compared with 2019, the retail sales of textiles and clothing from January to October A year-on-year increase of 2.23%. In the first half of the year, the monthly sales value of textiles and apparel in the domestic market performed well, but the off-season performance in July-August was not satisfactory. From September to October this year, the dual control policy caused raw material prices to rise, and fabric prices followed suit. However, as production capacity returned after power restrictions were relaxed, orders lacked sustained growth, and domestic sales performance was not as good as the same period last year. Overall, the domestic demand market shows a weak recovery, and the trend is expected to continue in the future.
Despite the high sea freight prices, overseas consumption will recover in 2021 and exports will still see significant growth, especially clothing, which performs well. Textile exports from January to November 2021 were US$117.68 billion, a year-on-year decrease of 9.1%, and an increase of 19.8% from the same period in 2019; clothing exports from January to November were US$154.35 billion, a year-on-year increase of 25.2%, an increase of 12.2% from the same period in 2019. The recent new virus strain has affected market confidence, and if it spreads again, demand will be suppressed; and if a new vaccine can be developed in time and popularized in the future, the overseas market is expected to continue to improve.
6. Market Outlook and Strategies in 2022
In terms of PTA, judging from the production status in 2022, Zhejiang Petrochemical’s new PX device has been released at the end of 2021. There will be almost no new production capacity for PX to be put into production in the first half of next year. In terms of PTA, there is only the new device of the second phase of Yisheng New Materials, so we think There is little pressure to put PX-PTA into production in the first half of 2022, and the processing fees of PX and PTA should not be overly pessimistic. With the large-scale release of new production capacity in the second half of the year, the processing fees in the PTA market will once again face the test. Judging from the current market structure, the low processing fee situation is difficult to improve, and it is difficult for some small and medium-sized devices to restart. In the future, old devices will lose their competitiveness, and the market structure will be redistributed. The absolute price of PTA may fluctuate with the cost. Overall, the supply and demand situation is better in the first half of the year than in the second half. The fluctuation range of processing fees is expected to be between 250-600.
MEG is also in an expansion cycle, with marginal supply coming from coal-based equipment. In 2021, due to tight raw materials and poor profits, the coal-based production load will be low. Once market profits improve, the load of coal-based equipment will increase. Among the new production capacities, there are still many coal-to-coal plants being put into operation, which may be delayed, and the increase in supply is not very optimistic. The production of MEG from naphtha is still the main cost line to observe. Four sets of integrated devices are planned to be released in the first half of 2022, and MEG supply pressure is high. In 2021, the operation of overseas devices will be unstable, imports will fall, and port inventories will be neutrally low. If new production capacity is released, MEG will have greater inventory pressure in the first half of the year. The supply increase in the second half of the year is still not optimistic. Overall, the focus of ethylene glycol price fluctuations will follow the raw material market, paying attention to the fluctuations in oil and coal prices, as well as rebound short selling opportunities brought about by periodic strengthening of supply and demand.
In terms of short fiber, due to the large proportion of raw materials in the price, the cost fluctuates significantly. At the same time, short fiber is closest to the terminal in the industrial chain and has a strong awareness of the terminal market. Driven by demand in early 2021, short fiber processing fees rose sharply. However, after the second quarter, processing fees fell significantly due to insufficient downstream follow-up. At present, all indicators of downstream spinning mills are good, and the supply and demand of short fiber is still good in the industrial chain. Processing fees may increase in the first half of 2022. In the later period, as supply and demand pressure increases, processing fees may fluctuate downward.
7. Risk warning
Oil prices fluctuated sharply, overseas epidemics changed beyond expectations, and the commissioning of new equipment fell short of expectations.
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