Device Maintenance Continues To Support PTA Downstream Demand Peak Season To Digest Excessive Inventory

Since the rebound of crude oil at the bottom last year, PTA has been rising all the way, but under the pressure of multiple negative factors, such as the expected rise of US dollar interest rate increase, the sharp decline of oil prices, and higher downstream inventory, PTA fell sharply. On March 10, the week hit the biggest weekly decline in five years. Although PTA experienced a pullback after 55 weeks of gains, it is inevitable, but now the main contract has pulled back 50% from the high point. In the early stage, the upper edge of the platform has strong support, and the fundamentals do not support its continued decline. The market may rebound in the future.

There are certain Imbalance between supply and demand On the one hand, although the implementation of the OPEC national production restriction agreement is very good, in January and February 2017, the degree of OPEC countries' implementation of the production reduction agreement reached 92% and 86% respectively, but the rate of non OPEC countries' implementation of the production reduction agreement was only 40%, and the increase of non OPEC countries' supply increased the crude oil output in January by 390000 barrels/day month on month. On the other hand, the demand for crude oil consumption has a certain seasonality. According to the quarterly data of global crude oil demand, the first quarter is the low point of crude oil demand in the whole year, which results in a certain imbalance between supply and demand and suppresses crude oil prices.

However, in the context of the recovery of major economies such as China and the United States, the moderate increase in crude oil production will be consumed by the strong growth of demand, and finally achieve the rebalancing of supply and demand. EIA forecasts that the crude oil inventory will reach its peak in April this year, and then gradually decline and remain below 500 million barrels. The gap between supply and demand in the world oil market will gradually narrow, and it is expected to reach the balance between supply and demand after the third quarter of this year, thus driving the recovery of oil prices.

Due to the sharp decline of crude oil, PX has also dropped from a high of more than 900 dollars to about 860 dollars at present. PTA cost support has collapsed, resulting in a sharp decline in short-term prices. But at present, the PX maintenance season has started, and the supply side is not loose. With the rebound of oil prices, the drag on PX will also be reduced. In addition, there are many maintenance plans for PX in the second quarter, which will lead to a tight supply of PX and increase its price, and the cost side will still support PTA.

Just PTA In itself, the surge from the beginning of the year to the middle of February was undoubtedly an excessive overdraft of maintenance expectations. The news of the restart of 900000 ton units in Pengwei, Sichuan, the delay of maintenance of 3.75 million ton units in Yisheng Dalian and 2.2 million ton units in Hengli Petrochemical caused a big blow to PTA prices. However, as far as the processing price difference of nearly 1000 yuan on the panel at that time was concerned, the restart of units and the delay of maintenance were also reasonable.

However, after a month of adjustment, the current spot processing fee is only about 300 yuan, which is at a low level. The factory may take this opportunity to make maintenance plans. The capacity involved in the maintenance in April is about 6.3 million tons. If the operating rate is 75%, the overall output may be only 2.7 million tons, which causes a tight supply in stages.

Due to the holiday in the downstream during the Spring Festival, the operating rate of the terminal textile industry has dropped significantly, which has led to the January to present polyester The inventory has been in a state of continuous accumulation, and has now accumulated to the high level in previous years. The FDY inventory of Jiangsu and Zhejiang looms is 23 days, the DTY inventory is 27 days, and the POY inventory is 20 days, significantly higher than that in January. High inventory triggered an increase in panic in the industry, which is also one of the reasons for PTA's sharp plunge.

The enterprise has a strong willingness to produce and its load is at a high level. The current polyester load is 86%, up nearly 15% month on month and 7% year on year. With the approaching peak season of terminal consumption, the turnover of the textile city has gradually increased, production and sales have improved, and polyester enterprises have recently made concessions to promote sales. It is expected that the inventory accumulated in the previous period can be quickly digested in the second quarter, bringing more upward momentum to PTA from the demand side.

In summary, the decline of PTA in recent days was affected by the Federal Reserve's interest rate increase, the decline of crude oil and the unrealized expectation of overestimation of supply and demand in the earlier period. However, from the fundamental perspective, the cost side and the later supply and demand situation do not support the continued decline of PTA. In 2016, PTA completed its periodic bottoming, and its overall focus has been raised in 2017. In the near future, PTA will gradually repair the previous excessive decline and return to the fundamentals.

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