PTA Trend Stabilized, The Market Began To Reverse?

Since June, the trend of PTA has stabilized, the number of overhauls has increased, and the pressure of downstream polyester stocks has eased. In the face of fundamentals, has the market of PTA really begun to reverse?

Short term support for cost side

During the Dragon Boat Festival holiday, international oil prices rebounded and the cost side PX prices fell, followed by a rebound trend.

In fact, the rebound of PX is long-standing. PX China's main port CFR price has started to rise slightly since May 20th, and the signs of warmer growth are beginning to appear. In addition, two refineries and projects that have received much attention in the year 2019 have basically completed commissioning and commissioning.

So far, this year's domestic PX capacity expansion is basically over, plus the help of crude oil terminals before and after the Dragon Boat Festival. In the short term, the cost side's support for PTA price is emerging again.

Supply side accident overhaul increased

As of June 6th, according to the capacity of 50 million 290 thousand tons, the PTA utilization rate was 75.29%, which was reduced by 11.3 percentage points by 2 million 200 thousand tons in Jiangyin, 1 million 500 thousand tons in Tong Kun, 1 million tons in Sichuan and 1 million 400 thousand tons in Hua Bin.

According to past experience, device parking is a strong positive signal for the market. But last week, when crude oil was able to lead to a "retreat", the market did not respond much to the signal of this device. Until the oil began to rebound, the market responded.

Demand side performance is relatively healthy.

At the end of May, the stock pressure of polyester products was greatly alleviated, and the stock of filament staple fiber dropped to the low level in the past two years. According to statistics, the production and sales of polyester and silk products in Jiangsu and Zhejiang provinces were still good on the three day of the Dragon Boat Festival holiday, and the average estimate for 3 days was around 120%.

As of 10 days, the main production and marketing of polyester concentrated in the 200-240% level, and the output of individual higher factories reached 350% and 400%.

In terms of inventory, the stock market of polyester factories has been slightly reduced by the promotion of market production and marketing.

What is the trend of PTA in the later stage?

To sum up, PX prices follow the rebound in international oil prices, and short-term cost side support has been enhanced.

On the supply side, there are not many PTA overhaul devices. Most of them are short and short stops. The impact on supply and demand of the market is relatively short. The chemical energy plant will restart next week, and the market supply is expected to be adequate in June. In June, the domestic PTA will probably be overstocked.

Demand side, polyester load began to pick up, but polyester cash flow is still weak, and the market is still in the traditional off-season, the downstream replenishment efforts and sustainability need to be observed.

In the short term, with the rebound of oil prices, PTA will continue to be warmer.

The midline point of view, July OPEC+ may begin to increase production, the end of June Sinochem run PX device put into operation, the cost side still has greater pressure, or restrict the PTA price rebound space.

Follow up focuses on crude oil trend, downstream start-up load and polyester production and marketing.

(source: first futures, futures daily)