The Trend Of PTA Is Lingering &Nbsp; It Still Takes Time To Build At The Bottom.

Looking forward to the next few weeks, the author is cautious about whether the PTA main contract can be stabilized at the 7000 point, and the weakening of demand is the biggest reason why PTA can not get rid of the current difficulties.

Slowing global economic recovery

In 2010, the global economy as a whole continued the trend of good recovery in 2009, but the recovery process was full of twists and turns. European debt crisis, lack of confidence in the banking system to the real economy, high unemployment rate and trade protectionism caused the market to worry that the economic recovery process would slow down.

Market expectations for inflation still exist, but they are not as strong as they were at the beginning of the year.

In view of the European debt crisis, the recent euro zone countries and the International Monetary Fund have adopted a series of rescue measures, but as a short-term emergency measure, they can not fundamentally solve the problem.

The global economic recovery is likely to slow down. The demand for risk will continue to drive gold and the US dollar up, and commodity prices will continue to bear pressure.

Production profit margins remain large.

The seasonal support of the summer peak oil demand has boosted oil demand. The Gulf of Mexico oil spill event will also push up the cost of crude oil production and reduce the daily output of crude oil, but the US dollar trend remains strong in general and worries about the slowdown in economic growth partly offset the support of these factors.

In the third quarter, international oil prices may rebound to 85 - 95 US dollars / barrel. The seasonal rebound of oil prices will temporarily support naphtha and PX prices, but it will not have much effect on PTA prices.

The production profit per ton per thousand yuan is the main reason for the interruption of cost conduction. According to the June 17th PX CFR China / Taiwan LC30 45 day spot price, the production cost of PTA is about 6050 yuan / ton, and the PTA price index for the same day is 7100 yuan / ton, and the profit per ton still keeps above 1000 yuan.

In the industrial chain of crude oil, naphtha, PX to PTA and clothing textile, too much PTA production profit margin has weakened the supporting role of upstream cost to PTA price, and restricted the rising space of PTA.

2008 to 2010 profit and loss changes in PTA production

PTA supply pressure has not yet been alleviated

The high positive cash flow has brought positive incentives to PTA manufacturers. Since April, the operation load of domestic PTA devices has been around 90%.

In the face of the current market situation, the PTA spot business has a very high enthusiasm for setting up insurance, which can be verified by the change of PTA inventory in Zhengshang.

Since late March, the total number of PTA warehouse receipts and effective forecasts has been maintained at more than 30 thousand, compared with the number of warehouse receipts less than 5000 in the same period last year.

High futures inventories and high PTA production enthusiasm will make PTA supply pressure difficult to mitigate unless PTA prices fall sharply, prompting PTA companies to jointly Park and overhaul.

In addition, according to the provisions of the validity period of the standard warehouse receipts by Zheng Shang, the registration of PTA standard warehouse receipts before the twelfth trading days (excluding those days) in September will be completely cancelled before the fifteenth trading days of the month, which will inevitably bring a certain degree of psychological pressure to the market.

Weak demand is the biggest reason for PTA to get rid of its current predicament.

From the perspective of demand peak season, textile exports and cotton prices, the author is cautious about the PTA demand in the coming months.

Entering the June, textiles entered the off-season demand season.

Although the gross profit of polyester products is good, the start-up rate of polyester plant is still maintained at 80% level, but the loom operating rate in Jiangsu and Zhejiang provinces has dropped from 80% at the end of 4 to the current 70%.

In addition, in order to save energy and reduce electricity, there will be a large number of chemical fiber and textile enterprises in the 7 to September.

The decline in downstream demand is bound to feed upstream, and PTA demand will be constrained by seasonal demand decline.

In May, China's textile and clothing export figures were better than market expectations. But in the face of European debt crisis, RMB appreciation, labor costs rising, and Southeast Asian competition, the latter export may slow down.

From the current data, the EU still occupies 20.16% of China's textile and garment export market. Due to the uncertain European economic prospects, the European debt crisis has not been completely eliminated, and the export of China's textile and clothing to Europe in the second half of this year will probably slow down.

In June 19th, a spokesman for the people's Bank of China said, "further promoting the reform of the RMB exchange rate formation mechanism and enhancing the elasticity of RMB exchange rate", the RMB exchange rate reform may start under the pressure of internal and external pressures, and the export of textile and clothing has been cast a shadow.

At the same time, domestic labor costs are rising significantly, which will force some textile industry orders to turn to emerging markets such as ASEAN and Latin America. China's textile industry competitive edge is gradually declining.

The impact of cotton price trend on PTA demand can not be ignored.

Affected by tight supply, the price of cotton in the early stage is strong.

In June 18th, the CC index 328 index of China cotton was 17926 yuan / ton, up 1463 yuan / ton compared with May 4th.

At present, the price difference between polyester and cotton has risen from 5913 yuan / ton to 8316 yuan / ton. From the perspective of the substitution relationship, the advantage of polyester and short is more obvious. This widening price gap has increased the demand for short and short market, thus bringing price support to PTA.

However, concerns about the slowdown in textile and clothing exports and the risk of throwing away cotton and other factors in the country are shaking the foundations of cotton bull market. Cotton market is likely to weaken. This indicates that cotton prices are difficult to continue to form price support for polyester, short and PTA.

"Buy FU throw PTA" portfolio can continue to hold.

Cautious investors may be at a loss as to the current market environment, and price difference operation may be a good choice.

As the two main types of petrochemical futures, the correlation and liquidity of fuel oil and PTA can meet the requirements of price difference trading. In recent years, there has been a lot of research and Practice on the spread trading between PTA and FU, and the market has gradually accepted this operation.

Price is a direct reflection of the basic relationship between supply and demand, and the price difference is a direct reflection of the fundamental strength of each species. Therefore, behind the spread is actually the future situation of the basic varieties.

In terms of PTA and fuel oil, the cost homology, the high profit of PTA production and the weakening of PTA demand have created the basis for the current "buy FU throwing PTA" operation.

From the ratio of PTA1009 to FU1009 and the price difference chart, the difference between them began to weaken in early April.

In April 1st, the ratio and price difference between PTA1009 and FU1009 were 1.81 and 3859 respectively. As of June 18th, the above values decreased to 1.67 and 2936 respectively. The above figures are still in a downward channel, and the combination of "buying FU and throwing PTA" can still be held.

This operation will enable us to get rid of the investment trouble caused by the crude oil oscillation, and at the same time get the price differential and return.

The future profit is most likely to be realized in 7 - August, when the PTA autumn demand season is still unfolding, and the peak season for crude oil demand is still continuing.

The ratio of PTA1009 to FU1009 and price difference chart {page_break}

To sum up, PTA production profit is obviously high, and the market's policy tightening and foreign trade situation continue to worry. The 20 day moving average brings obvious pressure to PTA. If crude oil price does not rise sharply, PTA will still be dominated by weak market.

On the operation, it is recommended that investors should take advantage of the high level of emptying, and "buy FU1009 to throw PTA1009" can be held cautiously.