Futures Daily: Oversupply PTA Weak Callback

Since early April, when the PTA main contract reached a high point of 8766 yuan, PTA has gone out of a large decline in the market under the pressure of many bad news. In less than 30 trading days, the price dropped from 8766 yuan to 7360 yuan, down 1406 yuan, or 16%, and the important supporting position was broken down by light pine, and the market was panic.

Through the analysis of its fundamentals, we find that several main factors that support PTA upstream have changed. Under these factors, PTA will go out for a long time.

After the May 1 holiday, under the impact of the Greek debt crisis, in the short 10 trading days, the international crude oil barrel fell by 14.76 US dollars, or 16.44%.

And so far, there is no obvious stop signal. The increasing stock of crude oil will still have certain constraints on oil prices.

But the general pattern of the slow recovery of the global economy has not changed. With the coming of summer, the demand for crude oil will rise further. These factors will form a certain support for crude oil.

Therefore, we believe that after a sharp fall in the previous period, the space for the decline of crude oil has been very small, and the market outlook is expected to oscillate above 71.5 US dollars.

But before the European economy has improved significantly, the crude oil does not have the capability of a big upside.

The rise of crude oil is insufficient, and the cost supporting role of PTA will also be greatly weakened.

Affected by the weak crude oil callback, the upstream raw materials of PTA also fell across the board. Asian naphtha, mixed xylene and p-xylene prices all showed a weak callback pattern, which greatly weakened the cost support role of the PTA industry chain.

We believe that before the global economy has improved significantly, naphtha, MX and PX will still maintain a weak arrangement.

Since entering 2010, the profit margins of PTA manufacturers have been increasing, and their profits have risen to 1768 yuan / ton from the 407 yuan / ton in 2010 January. After a few days' fall, the profit per ton is still around 800 yuan. The huge profit margins have also brought great pressure to the PTA price.

Recently, the profit rate of the PTA plant has been above 90%, reaching a maximum of 97%.

Although the rate of commencement of polyester factories and Jiangsu and Zhejiang looms has dropped, the operating rate of PTA has remained high, resulting in a serious surplus of PTA supply in the market. We can see this clearly from the warehouse receipt daily of Zheng Shang.

By the end of May 17th, 43173 warehouse receipts were reported in Zhengshang, which hit a new high since September 2008. The accumulation of warehouse receipts has greatly suppressed the price of PTA.

From the perspective of downstream demand, China's textile industry exports have resumed growth.

According to the latest statistics of the General Administration of Customs of China, the export volume of textiles and garments in China in April 2010 was 14 billion 547 million US dollars, an increase of 32.19%, an increase of 16.44% over the same period last year.

From September 2009 to April 2010, China's textile and clothing exports totaled US $115 billion 904 million, an increase of US $3 billion 91 million over the same period, an increase of 3.74%.

Among them, textile exports totaled $44 billion 134 million, an increase of 14.30% over the previous year, and clothing exports totaled $71 billion 770 million, down 3.27% from the same period last year.

From the above two sets of data, we can see that the export of China's textile industry has continued to recover steadily, but the intensity of recovery is still relatively small, and exports are still lower than the same period last year.

And just concluded the Canton Fair data show that: this year's Canton Fair orders increased, but the price is not optimistic, many enterprises have the protection of customers or the profit of the painful choice.

In addition, since the beginning of April 2010, the price of polyester has been significantly resisted, but PTA is still rising rapidly.

The price of downstream products can not be increased, making the cost of PTA more difficult to pfer, which is also a certain degree of suppression of the price of PTA.

Recently, domestic monetary policy has also shown signs of tightening.

The increase in deposit reserve and the tightening of mortgage loans to a certain extent have hurt the confidence of the market to a certain extent. In April, CPI rose by 2.8% compared with the same period last year. It was only 3% feet away from the national regulation target, which made the market feel the inflationary pressure continued to increase.

To sum up, we believe that the factors that support PTA's rise have changed. Although there is a certain rebound requirement for PTA due to the sharp fall in consecutive days, its rebound is not large enough, and will continue to oscillate after that.

Operation, it is suggested that investors can choose to sell short when the rally is weak.