Overcapacity PTA Is In A Downward Channel.

Since the second half of 2009,

Production capacity is developing too fast, and downstream demand is falling.

Since the 2008 financial crisis, the demand for all links in the entire industrial chain of textile and clothing has been gradually restored. PTA and downstream polyester have begun a new beginning since the second half of 2009, PTA

But this quickly brought two most direct consequences: first, the overall load of PTA increased; secondly, the new round of investment boom of PTA industry came.

The profit driven nature of the capital has contributed to the substantial expansion of PTA capacity. Since the PTA construction cycle generally takes 2 to 3 years, the new PTA capacity has gradually been introduced into the market since 2011, and the peak of the commissioning should be from 2012 to 2013.

This year, 4 million 500 thousand tons / year of new capacity has been put into the market, and the capacity increase is as high as 29%. (Jiangyin Hon Bang 600 thousand tons / year PTA new installation was put into operation in January 15th; Yisheng Dalian completed 700 thousand tons / year bottleneck expansion in July; Yisheng Ningbo 2 million tons / year PTA new plant put into operation in June; Jiangsu three Lane 1 million 200 thousand tons / year installation in September, 600 thousand tons / year, October 600 thousand 600 thousand tons / year production.

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Development of PTA capacity since 2002

In addition to the 600 thousand tons / year capacity of the San Fang lane which was put into operation in September, the other new capacity has been completely opened.

At present, PTA's monthly theoretical supply capacity has increased by about 380 thousand tons over the same period, that is, the monthly output of PTA reaches 1 million 600 thousand tons and above, plus the import volume of 500 thousand to 600 thousand tons per month, the monthly supply of PTA will reach 2 million 100 thousand to 2 million 200 thousand tons.

However, can the downstream demand keep up with the increase in the supply of PTA? According to the current polyester production capacity (32 million tons / year) and start-up load (88%), the monthly output of polyester should be between 2 million 300 thousand and 2 million 400 thousand tons, and the demand for PTA should be between 1 million 980 thousand and 2 million 60 thousand tons. Considering the application of other fields, the monthly consumption of PTA is also 2 million to 2 million 100 thousand tons, which has already had an excess of 100 thousand tons / month compared with the supply data.

As the peak season in the second half of the year turned to an earlier stage, orders for the downstream textile terminals were scarce, inventories increased and profits declined. Many weaving enterprises are facing greater financial pressure. Many small and medium-sized mills are avoiding risks by shutting down production or reducing their losses. The starting rate of the main weaving production bases has obviously decreased, and the overall operating rate is only about 50%.

Especially after the Spring Festival this year, the financial pressure will become more prominent in the later stage. The situation of downstream orders will be worse and worse. Pessimism will dominate the market. The downtime and downloading actions of weaving enterprises will probably continue to develop.

Compared with the negative stock of polyester products which appeared once in the same period last year, there was a blockage in the downstream weaving links this year, resulting in a continuous increase in polyester sales pressure and a rapid fall in polyester prices.

Since mid September to November 11th, many pet products have fallen by 3000 - 3500 yuan / ton, while the PTA and MEG mainstream products in the same period decreased by 2430 yuan / ton and 2660 yuan / ton respectively.

The decline of downstream products is greater than that of upstream raw materials, indicating that the poor downstream demand is more obvious for raw materials.

In the same period of the same period, polyester stocks were mostly seasonal low in the peak season of consumption, and stocks continued to rise at present.

It is expected that a large number of new PTA installations will be built or planned in the next two years. If these projects are completed and completed on schedule, the total capacity of PTA will reach 40 million tons or more by the end of 2013.

According to the demand of polyester industry for PTA every year, the demand for PTA will reach 30 million tons per year by the end of 2013, and the total capacity of domestic PTA will reach 40 million tons / year. Taking into account the annual import volume of about 6 million tons, the capacity of PTA will exceed 15 million tons in the year of PTA.

In the medium to long term, the situation of oversupply of PTA is likely to further deepen, and the PTA market is still in the downward channel.

Of course, if the start-up of new large-scale installations is delayed, or the old ones are not planned to stop, or there will be big profits on the macro level, the PTA will likely rebound as well.