Introduction: The hot summer cannot warm up the tepid PTA market. Entering May, the PTA market showed an up-down-stable trend. Recently, the PTA market has entered an adjustment stage, with supply-side devices gradually restarting and demand-side loads declining. Coupled with the unfavorable production and sales of downstream polyester, and the imminent start-up of new production capacity, the current supply and demand of PTA has changed. It is expected that social inventories will gradually accumulate from May to June, suppressing prices. However, cost support and its own tight spot liquidity still play a supportive role in the market. So let’s take a look at how PTA should adjust its direction next.
PTA monthly balance sheet:
Source: Longzhong Information
The main tone of the supply side has turned and moved forward under pressure
The overall direction of PTA in the first quarter was along the The trajectory of crude oil is advancing, and the price of PTA is rising along with the gradual rise of crude oil. The cost side can be said to have given PTA a strong driving force. Coupled with the rotational maintenance of PTA equipment from March to April, the supply narrowed, which caused the PTA operating load to drop to a low of 70.89%. In April, domestic mainstream manufacturers reduced the supply of contract goods. The tight PTA spot market has led to relatively firm prices, and social inventories have dropped from 4.95 million tons in February to 4.28 million tons in April.
The destocking of supply and demand is obvious. Then after the May Day holiday, the tone of PTA supply began to change, with cost weakening and supply shrinking. First, let’s look at costs. Global stock markets have fallen due to concerns about macroeconomic inflation. The epidemic in India continues to worsen, traders have taken profits, and international oil prices have fallen sharply.
The loosening of the cost side caused the PTA market price to fall from 4,820 yuan/ton to 4,543 yuan/ton in the middle of the year, a decrease of 5.75%. During this period, the futures market once fell to the limit. The spot price of acetic acid in East China has dropped from a high of 8,400 yuan/ton at the end of April to 7,400 yuan/ton, and the corresponding cost of PTA auxiliary materials has dropped by 30-40 yuan/ton.
Furthermore, PTA’s fundamental supply-end pre-maintenance equipment, Sichuan Shengda, Xinjiang Zhongtai, Yizheng Chemical Fiber, and Xinfengming, restarted one after another in mid-May, and the supply load quickly increased to 85%. . In addition, it is expected that the new equipment will be put into operation soon, so the main tone of PTA’s supply and demand pattern will shift from inventory depletion to inventory accumulation in mid-to-late May.
Longzhong Information believes that PTA will be stabilized and adjusted in the short term due to the impact of the cost side. However, due to the limited impact space of crude oil and supply and demand pressure, the overall price is still mainly fluctuating in the 4500-5000 range.
In May, PTA processing fees rose from 300 yuan/ton to 500 yuan/ton, so the narrowing of processing fees is still the key to the rebound of PTA prices.
Based on crude oil expectations, the current price of PTA has basically reflected market expectations. The short-term market still needs to pay attention to the performance of crude oil. In fact, it is well known that the impact of crude oil on chemical products is very obvious. Due to the uncertainty about the trend of crude oil in the later period and the recurrence of foreign epidemics, it is temporarily impossible to estimate the continued rise of crude oil, and the price of naphtha We currently see the cracking spread and PX processing spread at mid-range levels. Therefore, in the medium and long term, the upside height of PTA is limited.
The current demand is weakening, but orders can still be expected in the future
In the near future The overall trend of the downstream polyester end is weak, with profit compression and inventory increase, resulting in increased maintenance of some polyester devices, with the load currently falling from 92% to 88%. In addition, the terminal weaving link has entered the off-season. However, at present, terminal weaving orders can be maintained for the time being mainly because the price of polyester filament has not reached the price level of the same period last year. Therefore, downstream users are still relatively optimistic about the market demand, so the stocking data has increased accordingly compared with last year.
Terminal market orders in May are still supported, but domestic and foreign orders will shrink in June, orders will be missing, and construction starts will further decline. It is expected that the turning point of the terminal weaving market will show a sharp upward trend at the end of July and early August. Therefore, overall downstream polyester production and sales still need to wait and see for improvement.
Summary: The accumulation of supply and demand pattern has reappeared, and the direction of crude oil prices in the later period is uncertain. If the center of gravity is upward, it will boost the PTA futures market or continue the recovery trend. However, with downstream demand temporarily stable and spot liquidity tight, the overall downward trend of PTA will be limited in the short term. As long as crude oil prices do not fluctuate significantly, it is expected that PTA will still move forward under pressure and the processing gap will remain at a low level. In the later period, we still need to focus on crude oil prices, the commissioning of new equipment and the recovery of terminal overseas orders. </p
