In the early stage, dragged down by factors such as expectations for increased production and recurring epidemics, international crude oil prices fell, and PTA began to move downwards in the range following crude oil prices. Recently, the main force of PTA has changed months to the 2205 contract. The 2205 contract has rebounded from the low point with the price of crude oil, with a range of about 6.74%. During the rebound, due to the epidemic in Zhejiang and other places, market concerns played a certain role in boosting the PTA market. However, the lack of improvement in the textile terminal still suppressed the price of PTA.
Strong cost support
Before the second quarter of 2022, there is a high probability that international crude oil inventories will be depleted, and prices may fluctuate at a high level of 70-80 US dollars per barrel. In 2021, PX production capacity will increase by 6.05 million tons, reaching 32.08 million tons, a year-on-year increase of 23.2%. Recently, due to the increase in PX production capacity and the high amount of PTA maintenance, the demand for PX has decreased, the PX operating rate has remained low, and the price of PXN has been under pressure. Relevant data shows that in 2022, PX will have nearly 9 million tons of new production capacity, with production capacity increasing by 28% year-on-year, while PTA production capacity is estimated to increase by 24% year-on-year. Therefore, PX is experiencing an oversupply situation, PXN prices are more likely to be under pressure, and PX operating rates may be suppressed. Based on the author’s judgment based on the trend of international crude oil prices, the cost side will have strong support for PTA prices in the first quarter of 2022.
The operating rate is expected to increase
In early December, epidemics occurred in Ningbo, Shaoxing, and Hangzhou, Zhejiang. Due to the high production capacity of the local polyester industry chain, the market is more concerned about the impact of the epidemic on the polyester industry chain. It is understood that the PX, PTA, MEG and polyester production capacities of Ningbo, Shaoxing and Hangzhou account for 35%, 18%, 6% and 20% of the total domestic production capacity respectively. Among them, Ningbo’s PX, PTA, MEG, and polyester production capacity account for 35%, 16%, 6%, and 3% of the total domestic production capacity respectively; Shaoxing’s PTA and polyester production capacity account for 2% and 7% of the total domestic production capacity respectively; Hangzhou’s polyester production capacity accounts for 10% of the total domestic production capacity. When the epidemic occurred, the overall load of polyester raw materials and products in Ningbo, Shaoxing, and Hangzhou was running smoothly, and only the PTA device of Yisheng New Materials reduced the load. From the data point of view, the epidemic has limited boost to PTA prices. The strengthening of PTA prices is more due to the impact of the epidemic on logistics and the market’s concerns about the epidemic. With the epidemic control in place, the impact of the epidemic on PTA’s operating rate will begin to diminish at the margin.
As of December 17, PTA’s operating load was adjusted to 62.9%. When Zhou Yisheng New Materials’ operating load increased slightly to around 60%, Fujian Fuhua’s 4.5 million tons load increased to 90%, Hengli Petrochemical’s 2.2 million tons unit was overhauled, and Yi Shandahua’s 6 million ton plant was temporarily suspended. The December maintenance plan for the PTA unit has basically been implemented, and the PTA unit is likely to restart in late December. According to the current maintenance plan, not many PTA units will be overhauled in January 2022. In addition, PTA will have new production capacity (approximately 3.3 million tons) launched in the first quarter of 2022. It can be seen that the PTA operating rate will rebound from low levels.
Polyester load margin reduction
In early December, major polyester manufacturers jointly reduced production, and the polyester load quickly dropped to 85% and then remained stable. Due to the epidemic control on logistics, the raw material distribution and cargo turnover efficiency of polyester factories in Hangzhou, Shaoxing, and Ningbo has declined, and downstream terminal demand has not improved. Some companies have reduced their workloads early and even started the Spring Festival holiday. In the week ended December 17, the polyester load dropped from 85.3% to 83.8%. Compared with the same period of the lunar calendar in 2020, the average operating rate of texturing, weaving, printing and dyeing in Jiangsu and Zhejiang has dropped by 13% to 25% year-on-year. After New Year’s Day, most weaving companies will suspend production and take holidays. A small number of weaving companies with orders will go on holiday in mid-January.
From the perspective of inventory, polyester filament inventory is at a high level in the past five years. In addition, downstream companies are going on holiday ahead of schedule, and polyester filament will face greater sales and inventory pressure in the future. Filament profits are not good, and polyester filament companies are more likely to see negative returns in the future. The overall inventory of bottle flakes is increasing slowly, and the operating rate is more likely to remain stable. Although the inventory pressure of short fiber is the smallest, due to the sluggish demand for textile terminals, it will also face accumulated inventory pressure in the future, and there is the possibility of reducing the burden. According to the current polyester forecast maintenance device, the polyester load may further decrease.
Based on the above analysis, as the operating rate of PTA rebounds and the operating rate of polyester decreases, in January 2022, the inventory status of PTA may change from destocking to accumulated inventory. In addition, international crude oil prices may maintain a high range in January 2022, PXN prices are under pressure, and the cost side has support for PTA prices. In the short term, PTA prices may maintain a range.
Currently, the impact of processing fees on PTA is neutral. In the future, PTA processing fees may be compressed due to the accumulation of storage in the early stage, high acetic acid prices, and strong crude oil prices. After the Spring Festival, as the start-up rate of polyester increases, we can pay attention to the long opportunities of PTA when processing fees are low.
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