Price Collapse Triggering Industry Crisis, PTA Giants Plan To Limit Production And Price

Along with the sharp fall in the price of PTA (PTA), PTA manufacturers are also from the former. Huge profits Turned into a loss, the industry cold wind bleak. To this end, several big PTA giants will reach an agreement to deal with the current industrial crisis by limiting production and pricing.

Zhejiang Yisheng, Sinopec chemical sales, Far East petrochemical, Xianglu petrochemical, MITSUBISHI chemical, Sheng Hong chemical fiber, Shanghai Ze Ze and other PTA industry chain related enterprises will hold a meeting in Hangzhou Xiaoshan today to discuss the new capacity expansion of PTA, PX (p-xylene) supply bottlenecks and downstream polyesters growth, etc., and look forward to the PTA market supply and demand and price trend in 2012.

According to a person in charge of a participating company, in fact, the meeting will also discuss the content of limited production and price protection. Because the current situation is grim, PTA has fallen below the cost, and market participants must have countermeasures.

Meng Hongjun, general manager of Jiangsu Hengli Chemical fiber sales department, said that the fundamentals of the PTA industry have undergone major changes recently. The upstream PX raw material price is still as high as 1400~1500 US dollars / ton, corresponding to the production cost of PTA is 9300 yuan / ton, but market Upper PTA Price Has fallen to about 8000/ tons, PTA enterprises from the former huge profits into losses.

According to the analysis, the PTA industry is frustrated at the same time. On the one hand, the upstream PX project does not increase supply next year, but PTA has about 2000000 tons of capacity increment. This part of the production capacity lacks the protection of PX, and the bargaining power of upstream raw materials is gradually losing. On the other hand, PTA enterprises often invest in polyester chip factories on the other hand. The polyester production capacity is increased by 3 million 700 thousand tons this year, and the increment is about 7000000 tons next year, which has already formed an excess. Under the condition of the terminal textile and garment demand is sluggish, the polyester industry's large losses are forced to reduce the operating rate, and PTA's pricing of downstream is not accepted by the market. "If we don't cut production, we really don't know what to do." Meng Hongjun said.

In fact, domestic PTA factories have begun to announce some production plans, but mostly in the name of "overhaul". For example, a set of 900 thousand tons of PTA installations in Zhuhai BP is scheduled to be maintained in December for a month or so. Shanghai Jinshan 400 thousand ton plant is still in shutdown; the 900 thousand tonne plant of Peng Wei Petrochemical is scheduled to be overhauled in mid December. Several other listed companies are also scheduled for 11~12 months. The operations of these enterprises are basically the same, and the price of PTA is still lingering low.

As a result, the Xiaoshan conference has attracted much attention from the market. The key point is whether the big tycoons will reach an agreement on joint production reduction, so as to win the PTA.

There are two main purposes in the industry analysis: one is the pull up price. The chemical industry generally adopts the billing mechanism, such as the PTA factory's quotation for the polyester plant in November is 10000 yuan / ton, the reference price is 8000 yuan / ton at the time of settlement, and the difference between the 2000 yuan / ton's advance payment should be refunded. In late November, the settlement price can be increased to reduce short-term losses; the two is to release the signal of reduced supply to customers. The industry adopts the "quantitative pricing method" for long term business dealings, but at present, the market is stagnant, and polyester factories are reluctant to purchase orders in 2012. The PTA giant hopes to promote its signing of next year's contract through joint production cuts.

In this regard, Wu Wenhai, an analyst with Soochow futures, said: "industry concentration is relatively high. If three or four companies can determine the price limit for production, it will still be effective."

The leaders of the above-mentioned enterprises believe that the price of PTA has dropped so much, mainly because of the bad macroeconomic conditions, and futures have brought down the spot. However, after several enterprises cut production together, the supporting role of cost will be enhanced significantly.

Meng Hongjun believes that if these enterprises really have positive measures, the market may go up in the short term. After all, PTA is profitable and has capital strength to carry it. But in the medium to long term, the contradiction between supply and demand imbalance in the whole industry chain will still be perplexed.

In addition, some people have compared the joint reduction of PTA enterprises in 2008 to the reappearance in 2008. In those days, the first Chinese Federation of Hualian three hit a very high price and finally went bankrupt. However, different opinions hold that this is a unified production reduction action of several large enterprises. The nature is also totally different from that of Hualian three Xin's unilateral attempt to raise stock through futures.