PTA: Strong Alliances Are Hard To Fight Against Weak Markets.

Since July, the operating rate of PTA has continued to operate at a low level, or even below 60%, and PTA price has not correspondingly continued to rise. The 1501 contract price fluctuates between 6600 yuan and 7150 yuan / ton.

Because of the decline of PX and weak demand for downstream, the PTA price is short of support. It is difficult to continue to raise prices simply by reducing production.

Since June, the PTA factory has jointly limited production and insured prices. The settlement price has been linked to the PX price. The price of spot and contract goods has been obviously supported by cost, and the factory production deficit has been greatly improved. At present, it has made a small loss or even made profits, so the interests of PTA enterprises have been guaranteed.

But it has produced obvious extrusion on downstream polyester enterprises, resulting in a sharp decline in polyester profits, which is also an important reason for the continuous decline of polyester operating rate.

According to CCF statistics, the average operating rate of polyester in August was around 67.6%, and the consumption of PTA was reduced by about 130 thousand tons compared with last month, and the consumption of PTA was obviously weakened.

Therefore, although the PTA enterprises have made the price rebounded by the joint production reduction, the profits of the industry have improved. However, because of the damage to the downstream interests, the demand has been suppressed in turn, which is not conducive to the continued rebound in prices.

The latest HSBC manufacturing PMI in August was 50.2, a 3 month low. The official manufacturing PMI was 51.1, the first time in 5 months.

The overall recession.

At the same time, Jiangsu and Zhejiang loom load rate rose to 72%, compared with the low level of the previous 59% has picked up significantly, but compared with the same period in previous years is still low.

Traditionally, fabric production starts in winter, Christmas orders increase in foreign countries, and overall orders will increase significantly in September. However, the performance of polyester downstream market is still not showing signs of peak season.

Although the market is still looking forward to the lower reaches, if the market is hard to start in the busy season, it will become a reason for PTA to fall further.

Lower costs and worse profits

Although the price of crude oil and naphtha has stopped falling recently, PX has made up for demand because of its lucrative profits, and its price has dropped below the level of 1300 US dollars / ton.

Better profits will continue to stimulate the production enthusiasm of PX enterprises. It is said that Japan's JX company plans to increase the average operating rate of the PX installations by 15 percentage points in the fourth quarter, and some of the devices that China planned to overhaul in September has also been postponed. In the future, PX will continue to face the pressure of increased supply.

Therefore, the cost side of PTA is expected to continue to go down and aggravate bad profits.

To sum up, the joint production reduction between PTA enterprises has improved the profits of the industry, but it has also paid a certain price. On the one hand, its output level has dropped sharply, on the other hand, it has damaged the interests of the lower reaches, resulting in the further weakening of its demand.

Due to lack of orders, cloth factory inventory is high, weaving start up rate recovery is not ideal, terminal demand is weak, restricting the cost of industrial chain pmission, limiting the PTA up space.

In addition, better profits have boosted the enthusiasm of enterprises, and the market outlook for PX is still bearish, exacerbating the expected decline in the PTA market.

Therefore, although enterprises cut production and insurance prices, it is difficult to change the fundamentals of PTA's weakness at the same time and downstream. Whether the market will be able to turn around in September depends on the recovery of downstream consumption.