Starting from November 2020, with the general increase in prices in the polyester industry chain, PTA prices have also experienced a round of rise, rising from about 3,000 yuan/ton to more than 4,500 yuan in early March this year. But on the other side of the sharp rise in prices, profits have not increased: in March, the spot price of PTA surged and fell, which also drove down the processing fee. The average monthly processing fee for PTA dropped to 338 yuan/ton. Since the ACP was negotiated at US$870/ton in March, if we consider it based on 50% spot + 50% ACP, the average monthly processing fee for PTA drops to 260 yuan/ton, and all companies are in a state of loss. It is understood that gross profit for the year has dropped to a 57-month low.
The PTA factory can’t stand it any longer!
In April, equipment maintenance was concentrated, and destocking efforts increased
Unlike PTA, on the other hand, downstream polyester filament yarns increased The business is in full swing, the operating rate has also been boosted by the “Celebrate the New Year in situ” policy and has remained at a high level, and profits have also reached a new high. But why hasn’t PTA’s gross profit increased?
In the final analysis, the direct reason for PTA’s lack of profit growth is the huge amount of social inventory. Affected by the impact of public health events and the launch of new production capacity, PTA social inventory rose to a high level after 2020, and has never seen a significant reduction in inventory since then. At the end of February, it reached an unprecedented high of 4.35 million tons. The reason why PTA can continue to accumulate inventory is that the price keeps rising.
Due to the high social inventory pressure, processing fees have not been improved, and the maintenance of PTA equipment was further intensified in April. At the beginning of April, Tongkun had 1.5 million tons and could invest 1 million tons. Baihong had 2.5 million tons of planned maintenance. Later, Hengli Line 1 had 2.2 million tons and Dushan Energy had planned mid-month maintenance of 2.5 million tons. New maintenance capacity will be added in April. 9.7 million tons. In addition, 9.14 million tons of production capacity is in shutdown mode. Among them, Reignwood, Ineos Phase 3, and Zhongtai were shut down in March, and there is no output expected in April. Therefore, based on the above maintenance estimates, the output in April is expected to be around 4.20-4.25 million tons.
From the perspective of demand, despite the continued poor production and sales and the obvious accumulation of inventory in polyester factories, cash flow is still maintained At an above-neutral level, the load is expected to remain around 93~94% in April. In addition, the new polyester production capacity of Xinfengming is 300,000 tons and Hengli is 400,000 tons (600,000 tons of spinning capacity, 200,000 tons of which have been included in the production capacity in the early stage).
Therefore, PTA destocking efforts increased in April, and destocking is expected to be around 400,000 tons. According to the maintenance rhythm in previous years, there are more maintenances in summer, and the current low processing fees have forced manufacturers to carry out maintenance in advance. According to the determined maintenance plan, including long-term shutdown devices, a total of more than 26 million tons of devices were shut down for maintenance from January to April, and the cumulative PTA production loss reached 2.71 million tons.
In addition to cost support, it is also partly due to the rising process of futures warehouse receipt inventory that started in September last year. Companies control the spot stock by registering the futures warehouse receipt situation. The inventory of PTA on the market has partially alleviated the high inventory pressure on spot goods. However, after analyzing the historical warehouse receipt inventory, the number of futures warehouse receipts began to enter a downward cycle in March. From early March to early April, futures warehouse receipts and effective forecast conversion stocks have dropped from the highest point of 2 million tons to 1.6 million tons. In other words, 400,000 tons of futures warehouse receipts have flowed into the spot market. Even so, the pressure on the PTA delivery warehouse is still obvious. As of September 1, 1.2-1.5 million tons of PTA warehouse receipt inventory will be converted into spot goods. Although the inventory of PTA raw materials in the hands of downstream polyester factories is limited (according to statistics, as of the end of March, the inventory days of PTA raw materials in downstream polyester factories was about 8.4 days, which is an intermediate level), high social inventories and the conversion of warehouse receipts to cash have jointly caused PTA destocking. The road ahead is long and will undoubtedly continue to be a huge pressure on PTA’s profit growth.
The obstacles facing the PTA factory: each mountain is higher than the other!
And three feet of ice does not freeze in one day. The obstacles facing the PTA factory are getting higher and higher! At present, the PTA industry has entered a new round of production capacity expansion cycle, and the launch speed of new production capacity is much faster than that of downstream polyester. In the first quarter, 4.9 million tons of new domestic production capacity was added, and another 3.3 million tons will be added in the second quarter. Without considering the clearance of old PTA and polyester production capacity, to absorb these new PTA production capacities, 960 tons of new downstream polyester production capacity will be needed. The reality is cold. In the first quarter, only 750,000 tons of new polyester production capacity was launched, which is far below the ideal level that can absorb the new PTA production capacity. In the second quarter, only 3.2 million tons are planned to be launched. Adding up the new polyester production capacity in the first and second quarters, the gap between supply and demand is already more than half. The serious asymmetry in marginal changes in production capacity has caused PTA’s losses to expand in the second quarter when downstream filament production and sales are booming after the year. This phenomenon will continue in the second quarter, and PTA’s production capacity still remains.
However, in the short term, the PTA industry, which has already withstood the two mountains of high capacity expansion and huge inventory, will also face terminal textile and clothing demand and Fluctuations in the upstream PX section and other pressures. Although the intensity of PTA destocking in April was greater than that in March,�As polyester factories stock up in advance, if there is no better stimulation of production and sales, purchasing sentiment in April may be phasedly weak, hindering further increases in basis spreads. Coupled with a large amount of warehouse receipt inventory pressure, PTA’s own upward drive is still limited. The huge amount of inventory comes first, and new production capacity comes later. Even if prices do not fall or even increase, PTA’s road to profit restoration is destined to be difficult. </p
