Downstream Demand Is Not Warm, PTA Cost Support Is Greatly Weakened.

Since May, PTA futures continued to continue its downward trend under the influence of a slump in crude oil and a general downturn in the commodity market.

We believe that Macro economy Policy continues to tighten, industry capacity gradually released, downstream demand is not hot, PTA related industry chain profit levels will gradually return to normal level, PTA will continue to oscillate in the end of the year, the reasonable price of spot should be near 9000 yuan / ton.

Downstream demand is not hot, PTA capacity begins to release.

Textile enterprises continue to be subject to rising prices of raw materials and continued appreciation of the renminbi. In addition, this year's electricity consumption situation is grim. The large-scale power restriction policy will restrict the start up rate of textile dyeing and printing devices, thus restricting the demand for raw materials. The recent Canton Fair shows that the industry is in a bad position, and European and American businessmen are still few. The rising cost of labor, high raw materials and appreciation of the renminbi make the domestic textile enterprises lose their dominance. PTA downstream demand has been showing a warm state, supporting at the beginning of the year. PTA price The rapid growth of demand has disappeared.

In addition, 2011 PTA industry 4 million 250 thousand tonnes of new capacity will be released and there will be at least 15 million tons of new capacity after 2012. The productivity growth rate of the chemical fiber industry during the "12th Five-Year" period is 8%. Considering the concentrated release of chemical fiber production capacity in 2011, the capacity growth rate will be less than 8% after that. PTA industry capacity growth will significantly exceed the downstream chemical fiber industry.

PX keeps oscillating, polyester trend downward.

The price difference between PX and naphtha and MX has been shrinking with the low price of PX and the strong price of naphtha and MX. According to the market theory, the profit of PX has dropped from nearly 500 yuan / ton to a reasonable level of below 200 yuan / ton. It is expected that the price of PX will remain stable in the future, and the cost supporting role of PTA will be greatly weakened.

Since mid March, polyester prices have been falling all the way. At present, the price of polyester chip market is getting lower and lower, and inventory is increasing. Polyester chip factories continue to maintain the principle of lowering prices. Recently, the mainstream price of Jiangsu and Zhejiang semi gloss chips is 12150 yuan / ton, which is 10.7% lower than the market high in March. According to preliminary statistics, in 2011, more than 6 million tons of new production capacity of polyester were planned to be put into operation. If the capacity of the downstream market did not increase significantly, it would inevitably lead to the contraction of enterprise profits. In the case of PTA prices continuing downward, polyester prices are expected to fall.

PTA spot market is stable, futures prices will oscillate bottom.

As the price of PTA has dropped sharply from the high level, the enthusiasm of low price enquiries for polyester factories and enterprises has increased, and the atmosphere in the spot market has improved. After the fall in polyester raw material prices, the profits of downstream enterprises have picked up, and polyester enterprises have begun to take the volume to reduce inventory. PTA factory production load still maintained at a high level operation, a slight increase from last month. At present, the profit of PTA is between 1000 yuan and 1500 yuan per ton. The profit of the enterprise is still relatively large, and the actual situation of the spot market is not as pessimistic as that of the futures price.

On the one hand, the cost support is weakened, the downstream demand is flat, and the continuous decline of cotton prices also makes the market lack of confidence in the PTA market which is the same as the textile raw material. But on the other hand, the PTA spot market is stable at present, and the profits of the enterprises are huge. The rigid demand in the downstream market will have a solid support for the medium term outlook of the PTA market, and the long-term outlook for crude oil prices will continue to be strong, so PTA will shake the bottom in the year. At present, the reasonable price level should be around 9000 yuan / ton.