Will There Be Another Fire In The PTA Market In The Post Crude Oil Era?

According to statistics, the total capacity of PTA in 2016 is about 46 million tons, the total output is expected to be 3140 million tons, the output growth rate is 3.6%, and the polyester production rate is increasing. The PTA supply and demand is relatively balanced throughout the year.

In 2016, the actual productivity rate of the PTA industry was 64.34%, the effective parking capacity of 13 million tons or so, and the effective capacity utilization rate of the PTA industry reached 87.7%.

Under this background, the domestic PTA production leader has a capacity of 13 million tons, which accounts for 39% of the domestic immediate effective capacity, and its monopoly on the PTA supply market is enhanced.

2016 Yisheng company has been driving through full load to reduce unit production costs throughout the year, and has sold surplus goods through trading companies to futures market to control the cash flow of other industries to suppress other small and medium-sized PTA factories.

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In 2016 1-10, the average production cash flow of PTA industry was 498 yuan / ton, and the polyester factory with a deduction of 30 yuan / ton returned. In fact, the cash flow of PTA470 yuan / ton was in a state of loss. Among them, Yisheng petrochemical and Hengli carried out hedging management in the PTA futures market through the lifting of water, and the profit of 150 yuan per ton of PTA futures was compensated for the surplus, and the remaining PTA factories were basically in a state of loss.

As early as the end of November, for the first time in the past eight years, OPEC has cut production agreements, which will reduce production by about 1 million 200 thousand barrels per day. The new production target will be 32 million 500 thousand barrels per day, while Russia promises to reduce production by 300 thousand barrels per day.

According to the "Algiers agreement", the General Assembly decided to implement the target of 32 million 500 thousand barrels per day of the 14 member states of OPEC, so as to accelerate the continuous decline in excess inventory and promote the rebalancing process in the oil market, which came into effect on January 1, 2017.

After 15 years of separation between OPEC and non OPEC, a new round of global production reduction agreement has been reached, which indicates that the low oil price era has become a history. The reduction agreement will become the biggest positive news for the oil market in 2017.

The implementation of the production reduction agreement will greatly improve the supply and demand structure of the global crude oil market in the first half of next year, and the era of oil production will be reduced.

In the post crude oil era, will there be another fire in the PTA market?

Looking forward to 2017, Yisheng business ideas in bulk commodities, or take parking inspection to increase production capacity to raise cash flow pricing strategy are all more than PTA, the remaining Guangdong Xiang Lu petrochemical, Peng Wei petrochemical and Far East Petrochemical can restart PTA idle capacity in 2017 is uncertain.

The growth rate of polyester production and demand is 5.5%. The actual data calculation predicts 2017 annual PTA production capacity is 50 million tons. In 2017, the effective output of PTA in the whole country is about 33 million tons, so that the actual capacity utilization rate of PTA is near 66%. If the domestic idle capacity is not restarted, the effective capacity utilization rate in PTA2017 will reach more than 92%. The device must be maintained for about 15 days a year, and the utilization rate of PTA capacity is approaching the limit.

It seems unlikely that PTA will be produced.

In addition, in 2016, only 2 million 200 thousand tons of new capacity of Hon Bang Petrochemical Company were put into operation in China in 2016. The stability of the plant has been affected by environmental protection and other factors. The load remained relatively low during the year. The Sichuan Shengda, which was originally planned to be put into operation, and the PTA trust device in Hong Kong were postponed to 2017.

As the industry remains low and starts to become a market consensus, the new PTA capacity is not as effective as the market.

In terms of productivity, China's 2017

Basically, it is in a tight supply state.

By the end of November, the domestic PTA social inventory dropped to 1 million 660 thousand tons, and in November only 30 thousand yuan per Annex, and the inventory consumption ratio remained at a relatively low level of 60%.

In December, the PTA plant operating rate is expected to remain at 74%.

The operating rate was maintained at 81%, and PTA inventories increased by 100 thousand tons. In January of next year, domestic PTA utilization rate should be maintained at 74% higher load level due to factors such as winter and cash flow. However, the factors leading to the Spring Festival holiday will lead to a decline in the load of polyester starting to 75%. The PTA social inventory will accumulate 250 thousand tons to 2 million tons in January this year, and the PTA consumption ratio will also rise to a relative high level of 80%.

At present, the supply and demand of PTA factories in the whole country are in a state of small inventory.

By the beginning of December, the inventory data of delivery warehouses were counted, and the number of PTA warehouse receipts plus effective forecasts reached 163 thousand and 500, which was at the highest level in the same period of history.

The main reason for this situation is that this year, the PTA factory has a larger selling rate, followed by a substantial increase in the PTA basis trading market, increasing the actual demand for warehouse receipts. As a result, PTA social stocks are explicit through the form of warehouse receipts.

At the end of the year, the cash flow will also shrink slightly in the near future. But looking forward to the whole 2017, we think that the PTA supply and demand pattern will be higher than that in 2016 when the demand is strong.

We believe that the price of crude oil will gradually increase in the future when OPEC achieves the frozen production agreement. As the source of the PTA industry, the cost of crude oil will increase with the price of crude oil, while the domestic PTA capacity is low and domestic consumption demand is large, and the price of PTA is expected to increase gradually.

However, although the era of post production reduction has arrived, some investors have begun to question the future implementation of oil production reduction actions and whether they can significantly improve the current excess supply and demand relationship.

Will the member countries strictly abide by the quota of production? Will Russia abide by its commitments? This is all a potential risk. And the Fed's rate hike will not only be implemented as scheduled, but the pace of interest rate hike may be faster this year, and the risk appetite of the global market will be suppressed. The strength of the US dollar will further weaken the action of crude oil.

We can see that PTA has opened up the road after the crude oil market, but this road is destined to be bumpy.

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