Polyester Rigid Demand Support Price Overcapacity Restrict Price Rapid Rise

Since late October, crude oil prices have continued to fall, driving down the price of naphtha and PX, resulting in the downward trend of the cost of PTA, and the warming of the wait-and-see atmosphere in the downstream market. Polyester production and sales have dropped, and the multiple negative resonance has resulted in the PTA price falling from 4900 yuan / ton to 4750 yuan / ton. However, the recent crude oil prices are expected to stop temporarily. The weakening of the raw material market will help stabilize the market mentality. The production and sale of polyester products on Monday will be more than 100%, which can strongly prove this view. Therefore, once crude oil prices rebound, they will stage a boost to PTA.

Since the second half of the year, the domestic polyester market has performed well, and the stock of polyester enterprises has been declining, which has dropped to a relatively low level in the near future. The operating rate of polyester industry remained at a high level during the year, which is also significantly higher than that of the same period in previous years. This demand for PTA is better. From historical data, this situation is expected to maintain until December. After entering December, with the approaching of new year's day, the load of the downstream looms will gradually decline, and the polyester operating rate may also be moderately low, but the specific time and magnitude depend on the market performance. Therefore, it is expected that polyester enterprises will still have certain stock preparation capacity before mid December. When the price of PTA is callback, the action of moderate dips will close the price down, and PTA is expected to slow down.

In the early November, the upstream raw material market weakened, PTA supply increased, downstream demand fell and other bad resonance, PTA prices quickly dropped, but the main 1701 contract in 4750 yuan / ton to get technical support, while crude oil prices rebound, also made the market atmosphere warmer, PTA prices fell back this week. I believe that once the rigid demand is supported, Raw material price A fall in the polyester plant may bring PTA prices up and up quickly. Conversely, once the PTA price rises rapidly, it may lead to corporate hedging operations, thereby limiting PTA price rise.

Because of the partial disagreement among OPEC members, the market worried that the Vienna conference in November 30th might not be able to reach an agreement. It once became an important negative force in the crude oil market, which led to a continuous decline in crude oil prices. However, OPEC Secretary General Barr Kim said on Monday that OPEC will abide by the September production reduction agreement, which has boosted the international crude oil market. In addition, the Federal Bureau of investigation decided to cancel Hilary's investigation, and the US stock market was significantly boosted, and crude oil prices rebounded accordingly.

Recently, due to the decline in raw material prices, PTA Process cost Fluctuating at 500 yuan / ton, which is a good level of processing fees in the second half of this year, has also stimulated the enthusiasm of PTA enterprises. Wind information released data showed that as of November 4th, domestic PTA operating rate rose to 75.7% annual high. At present, the domestic PTA capacity is still surplus, and the industry is in the stage of elimination of backward production capacity. To this end, the domestic production giant has changed the original joint production reduction strategy, but hopes to eliminate backward old equipment through the competition of processing fees. Once the PTA processing fee rebounded, it may make the old plant that has stopped production resurgence, which is PTA production enterprises do not want to see.

Based on the above analysis, since November, the price drop of PTA is mainly due to the decline of the cost caused by the continuous decline of crude oil and the fall of the production and sale of downstream polyester products. The overcapacity of the industry also does not support the sustained and rapid price rise. However, the low inventory and high load state of polyester enterprises is a potential advantage for the market, which will remain until December. Therefore, in the long run, the pattern of excess capacity will restrict the rise of PTA, but in the medium term, under the support of rigid demand, the decline of PTA is limited, and the oscillation is still the main theme. Investors are advised to maintain bargain buying in the four quarter, with short and medium term operations.