Formosa Accident Has Pushed Up Polyester Chain Price Polyester Filament "Turn Over" Market?

Indeed, the first day after the festival, the market ushered in the biggest collective inflation this year.

According to the 8 day early market feedback, the news of the explosion of Taiwan's PX device on the weekend triggered a sharp rise in PTA futures. In addition, the Sino US negotiations were good, and the polyester filament market was partially pulled up.

By 11:00, the average production and marketing of the direct spinning polyester filament market has exceeded 250%, and some of the higher factories have been near 400%-500%.

And ushered in the long lost market is not only polyester filament, PTA futures also closed yesterday.

However, at present, the polyester market has experienced nearly a month of downturn in the anticipation of the peak season. There are many unexpected events in the early stage, but after all, it is difficult to pick up. Once again, the market comes to the outbreak of sudden events. Is this rise the trigger for the turning point of polyester market?

Who made the recent polyester market fluctuate greatly?

As far as polyester filament is concerned, I believe that the main driving force for the recent rise is the upgrading of upstream raw materials.

On the afternoon of April 7th, after the LPG gas leak, the aromatics Factory No. 3 (ARO 3) exploded in the 1326 TT (OP) plant. The accident will tighten the supply of benzene, PX, SM, phenol and PTA in 2019.

It is understood that the ARO 3 capacity of the platform includes 640 thousand tons of benzene and 870 thousand tons of PX, accounting for 2% and 3% of East Asia's capacity, respectively. PTA affects the capacity of 1 million 100 thousand tons, affecting the output of 550 thousand tons (previously, 550 thousand tons are in a state of shutdown). Under this influence, the main contract of PTA is on the market.

After the explosion, the Yunlin county government ordered the closure of ARO 3 and ARO 3, which may be closed for 1 months. After the ARO 3 of the platform was released in September 22, 2015, the explosion stopped after 5 weeks, and the short-term PX price was raised by about 30-40 US dollars / ton.

The explosion of Taiwan will aggravate the supply shortage of PX, benzene and PTA, which has boosted the polyester market to a certain extent, resulting in the production and sale of 400%-500% in the morning.

Today another factor comes from the overhaul of the PTA device. The PTA maintenance plan continues to increase in the near future, and the supply reduction makes PTA's inventory expectations in April, resulting in a significant reduction in PTA supply pressure in the future.

Short term boosted the PTA market.

In addition, under the support of sustained cuts in OPEC+ countries, the international oil price is back to the rising channel. At present, Brent's oil price is back above 70 US dollars / barrel. The market is optimistic about Q2 oil price trend is expected to exceed 80 US dollars / barrel.

Of course, it also comes from the replenishment of the downstream demand. The downstream Jiangsu and Zhejiang looms and the additional bombs have been reduced by more than half a month due to the new orders and the devaluation of the inventory. Under the low production rate, there are now a new round of replenishment nodes. According to the weaving Market, most of the weaving factories are already in low raw material stocks. If there are any sudden incidents in the market, they will not rule out buying or selling goods.

Polyester market is expected to rise.

After a long period of nearly 1 months of tempering, the market finally saw the dawn of rising prices.

But can the rise become a turning point in the market?

With the completion of Fuhai 1 million 600 thousand tons and Hengli 2 million 250 thousand tons of PX, the supply and supply of PX have changed a lot. PX's profits have dropped, but the whole is still at a relatively high level of profitability, which is better than that of the market. PX profits have fallen sharply.

At present, the price of oil is rising moderately, which is favorable for the integration and integration projects to be put into operation. The supply and demand pattern of PTA is improving and the supply of filament is orderly. Since March 2019, the price difference between PTA and filament has expanded continuously (the current profit of PTA is restored to 300-400 yuan / ton, while the filament profit is restored to 600-700 yuan / ton), and the demand for downstream fabric market is rising. The profit performance of filaments enterprises in the first 19 quarters of the year will be much better than the market expectation, laying a solid foundation for the profits of large refining and chemical enterprises.

Under the shortage of overseas PX supply, it is estimated that the total profit of PX-PTA- filament will be better than that of the previous market.

At the same time, the recent domestic chemical safety production has been widely concerned, and the national follow-up chemical environmental impact assessment has been raised.

Jiangsu province involves petrochemical products, mainly including acrylic acid 1 million 340 thousand tons, accounting for 40% of the total capacity of the country, PTA 9 million 100 thousand tons, accounting for 20%, caprolactam 600 thousand tons, accounting for 17%. In the short term, environmental safety inspection in Jiangsu province may affect the operation rate of related devices, and enhance the price of polyester products.

Generally speaking, in the short term, the impact of Formosa accident is superimposed on oil prices, pushing up the price of polyester chain. In the medium term, the advantages and disadvantages of PTA supply and demand pattern are prominent, prices are rising or more sustainable.

But from the point of view of weaving, at present, the whole market is not very clear. The contradiction between the upstream and downstream ends of the industrial chain still needs to be differentiated, focusing on the supply of PX, the maintenance of PTA devices and the downstream orders.

All in all, the market is not easy to pick up and needs to work together. Otherwise, the market is still holding up a lot of gas. Remember to repeat the mistakes of last June.

(source: CITIC)