Chemical Fiber Raw Materials Enterprises Cut Production "Winter"

The blind large-scale expansion has brought the local government.

As the raw material of modern textile industry, chemical fibers are widely used in various fields due to their special properties.

The latest data show that the current National PTA production capacity of about 60-70%, compared with the first half of the full load started to decline significantly.

Among them, Chongqing phaway Petrochemical all 900 thousand tons of production capacity of the terephthalic acid equipment has been fully overhauled for half a month since December 16th; Zhuhai BP90 million tons capacity equipment overhaul for 35 days, accounting for 60% of the total capacity of its enterprises; Yisheng Petrochemical 650 thousand tons of production capacity equipment in December 10th to overhaul, yishunhua not repair, but stopped 20% of the capacity; some 300 thousand tons of small and medium-sized production capacity equipment simply stop production.

It was originally the peak season of production in previous years. Why did such a large-scale parking and low opening rate occur this year? Through research, we can see that this has many relations with the current economic situation and the industrial structure of PTA and its price trend.

As a matter of fact, this restriction on production has long been a precursor to the price of purified terephthalic acid. Since the second half of 2011, the price of purified terephthalic acid has been decreasing, and its futures price on the Zhengzhou Mercantile Exchange has fallen from 12000 yuan / ton to the lowest 7800 yuan / ton, or more than 30%.

This is no less than a cold winter for the production enterprises: the production cost of PTA in East China is about 8700-8800 yuan / ton, while the current market price is only about 8400 yuan / ton, that is to say, every production of one ton of terephthalic acid company loses 300 yuan / ton.

With the real arrival of winter, the price of PTA is still getting "cold". Under such circumstances, many manufacturers can only limit their production prices and protect their prices so as to expect to pass through this difficult period.

Slowdown in growth leads to sluggish demand

In the second half of this year, China's economic growth showed a marked weakness.

In the third quarter, gross domestic product (GDP) grew by 9.1% year-on-year, the third consecutive quarterly slowdown, and the lowest level since the second quarter of 2009, the 8.1% increase.

This brings us to the "three carriages" that drive our economy at the same time slowing down.

This has a greater impact on all sectors including refined terephthalic acid.

From the perspective of the textile industry closely related to consumption of purified terephthalic acid, its consumption and export growth both showed a marked decline or even a decline.

As of November 2011, China's chemical fiber production and sales volume was 10 billion 810 million meters and 10 billion 620 million meters, down 10.9% and 11% respectively compared with the same period last year.

And it is expected that data in the four quarter will still be lower than last year.

The export side is also not optimistic.

In November, China's textile and garment exports amounted to US $20 billion 392 million, an increase of only 7.2%, setting a new low except February (Spring Festival month).

In the peak season of Christmas before Christmas abroad, such figures are enough to show that current demand is difficult to raise prices.

Due to the rapid retraction of exports, the upstream enterprises are under tremendous pressure.

This led to the difficulties in the sale of refined terephthalic acid enterprises, and a large backlog of inventory in the middle traders, which further defeated the confidence of the enterprises, and the trade enterprises did not dare to further store up the goods.

Worried that prices will not improve for a long time, manufacturers will try their best to empty the stock and become more cautious in production, so as to avoid unnecessary product backlog.

The downstream textile industry has also maintained a low operating rate at present.

Although there is still about a month away from the Chinese new year, some small and medium-sized enterprises in Jiangsu and Zhejiang provinces have begun to celebrate the Lunar New Year holidays in early 12.

The rapid and rapid pmission of this demand has become an important reason for the production of purified terephthalic acid plants.

Overcapacity leads to lower operating rate

In recent years, China's PTA production capacity has expanded rapidly, gradually from insufficient capacity to overcapacity.

In 2005, China's PTA production capacity was 5 million 900 thousand tons, while in 2010 it reached 15 million 750 thousand tons, an increase of 167%, an average annual growth of 21.7%.

And from 2011 to -2013, domestic production capacity will further increase, and the growth rate will continue to accelerate.

Data show that in 2011, China's production of purified terephthalic acid reached 4 million tons, a new high in recent years, and the new capacity in 2012 will still reach 3 million 700 thousand tons.

Blind large-scale expansion has brought economic and social benefits to local governments, but it is undoubtedly an injury to the industry.

Against this background, PTA enterprises will gradually reduce the operating rate to cope with the increasing supply of goods on the market.

This will cause a lot of idle capacity.

The new industry of purified terephthalic acid will follow the same path as iron and steel, PVC and other industries.

The domestic large-scale production of purified terephthalic acid is on the face of poor international economic situation, and domestic enterprises are short of funds.

This has given our investors a good lesson, which has raised the alarm for us to expand the production of purified terephthalic acid rapidly.

Shortage of raw materials will become a late theme.

Compared with the rapid expansion of PTA production capacity in China, the capacity expansion of its raw material PX (p-xylene) is lagging behind.

The reason is that in the integrated equipment, PX is a by-product of crude oil production. The production capacity of PX depends largely on whether the price of refined oil is profitable. If the price of oil is low, the refining and chemical enterprises will reduce the operating rate, so that the output of PX will also decline naturally.

Lead to the production of purified terephthalic acid.

China's oil resources are scarce, and 50% of its crude oil is imported every year. Therefore, the production of PX relies mainly on foreign enterprises.

We do not have the right to speak at the price of PX.

As the price of international crude oil has been rising, the price of crude oil of the New York Mercantile Exchange (NYMEX) is currently close to 100 US dollars / barrel, so although the price of purified terephthalic acid has continued to decline, the price of PX has not dropped significantly in the past six months, and the spot price in Asia is about $1500 / ton, down 200 US dollars / ton compared with September, which is basically flat or even slightly higher than the June price level.

This means that China's purified terephthalic acid production enterprises suffer not only the slow down of downstream demand and the rapid increase of capacity, but also the pain of relative increase in raw material costs.

In this way, it seems difficult to find a more effective solution in addition to reducing the operating rate.

Such a cost push, if sustained, may boost the price of purified terephthalic acid in the later stage and become a factor in the market speculation.

In addition to limiting production and protecting prices, many PTA manufacturers are now participating in the futures market to ease the damage caused by falling product prices.

In the last half year, some enterprises have received production orders and sold them in the futures market, so that some profits have been locked in advance.

Through hedging in the futures market, the loss of spot production due to systemic risks is compensated. PTA futures have played a significant role in the cold weather of enterprises.