In the second half of the year, the pressure for China’s PX to be put into production will gradually be realized, but the accumulation rate of Asia’s PX balance sheet is still controllable. It is expected that the PTA balance sheet will usher in an inventory turning point in July, moving from inventory depletion to inventory accumulation cycle. Rising crude oil prices continue to push up PTA costs.
There will be more new PX production capacity in the second half of the year
Starting from July, PX’s new production capacity will be put into production The pressure gradually materializes. This year, the world’s new PX production capacity is approximately 5.85 million tons, corresponding to a global PX production capacity growth rate of approximately 7.6%, while China’s PX production capacity growth rate is 17%. Judging from the pace of production, China’s new PX capacity is No. 1 and No. 2 of Zhejiang Petrochemical Phase II, which will be realized in July and the fourth quarter respectively. The PX maintenance plan in the second half of the year is less than the same period last year. The currently announced PX maintenance volume has shrunk significantly year-on-year. Starting from July, the PX maintenance volume will shrink rapidly.
With the mismatch of new production capacity between PX and PTA, PX’s gross profit rebounded rapidly in the first half of the year. PX’s new production capacity only began to be realized in July, and the supply increase was realized later; while PTA’s new production capacity has been realized in January by Fujian Baihong, 2.5 million tons, and in February, Honggang Petrochemical Phase II, 2.5 million tons, to promote PX processing Fees quickly rose from a minimum of US$140/ton to around US$280/ton.
PX processing fees have rapidly dropped to 200-230 US dollars/ton since May, trading ahead of the expected start-up of Zhejiang Petrochemical PX in July and the subsequent PX accumulation cycle.
In terms of PX demand in Asia, it is assumed that the operating rates of PTA in Japan and South Korea will not change much in the future. The main change comes from the estimate of China’s PTA production, including Yisheng New Materials 2 in July and September. A set of 3.3 million tons of PTA is expected to be put into production. If PTA’s new capacity, Yisheng New Materials 2#, fails to materialize as expected, PX inventory accumulation may accelerate from August.
PTA’s new production capacity is gradually realized
The second round of PTA new production capacity The pressure to increase production capacity will begin to materialize in July. This year’s new production capacity is approximately 11.6 million tons, with Baihong’s 2.5 million tons and Honggang Phase II’s 2.5 million tons both realized at the beginning of the year. In addition, two sets of 3.3 million tons of Yisheng New Materials’ production capacity will be realized in the second half of the year. Among them, Yisheng New Materials 1# has a capacity of 3.3 million tons. One set of reactors has been tested on June 20. It is planned that three sets of reactors will be put into operation before the end of June. Pay attention to the specific time when the subsequent 2#3.3 million ton unit will be put into operation.
In the second quarter, the maintenance of PTA devices increased significantly year-on-year. First, the number of long-term shutdown devices increased, and second, major manufacturers reduced production to protect prices. In late June, Hengli Yisheng cut its contract volume again. Hengli’s July contract volume decreased by 50%, Yisheng Petrochemical’s July contract volume decreased by 30%, and PTA processing fees returned to more than 500 yuan/ton. It is estimated that PTA processing fees will hover in the range of 350-500 yuan/ton for a long time.
Terminal demand continues to recover
This year’s terminal growth rate is acceptable year-on-year . The growth rate of polyester production from January to May was 22%, but the terminal growth rate was higher than the growth rate of polyester production. Therefore, the inventory of gray fabrics this year is lower than that of previous years. There are sufficient polyester production plans to be put into production in the second half of the year. From January to May, 2.4 million tons have been realized, and there are still 4.26 million tons waiting to be realized in the second half of the year. In the third quarter, it was 2.07 million tons, and in the fourth quarter, it was 2.18 million tons.
The terminal loom begins to reduce load at a high level. In the second quarter, the growth rate of looms and texturing remained high, but new orders for domestic trade and foreign trade were still average, with no obvious growth beyond expectations. Although the inventory pressure on gray fabrics has declined year-on-year, the month-on-month pressure has gradually increased. Against the background of general orders, terminal factories have a general willingness to purchase polyester, and the raw material stocking days are only at a low level of 1-2 weeks, resulting in greater pressure on polyester filament factory warehouses. Therefore, the sales strategy of filament factories this year is pulse type. Price reduction promotions to divert inventory pressure. Foreign trade orders improved slightly in late June, and attention will be paid to the subsequent improvement. The average operating rate of polyester is still running above 91%, which is at a high level year-on-year. The operating rate of filament yarns remains at a high level year-on-year. With the compression of filament profits, there is limited room for subsequent price reductions and promotions. Therefore, there is a possibility that the operating rate of filament yarns will be compressed in the long term.
To sum up, under the background of strong crude oil prices, the naphtha processing fee is expected to be US$100/ton. The processing fee for PX is US$200/ton, and the processing fee for PTA is RMB 400/ton. Assuming that Brent crude oil is between 75 and 90 US dollars per barrel, the absolute price of PTA is between 4,580 and 5,120 yuan per ton. If the growth rate of clothing demand exceeds expectations in the second half of the year, or the PTA device reduces production or malfunctions more than expected, the PTA processing fee will increase by about 150 yuan/ton, and the PTA price will correspond to 4730-5270 yuan/ton. </p
