PTA Futures Market Reversed 11% In A Month, But Long-Term Upward Pressure Still Exists.

Recently, the futures market of PTA has been reversed, and it has become a star of the commodity market.

Zhengzhou PTA futures main contract 1909 rebounded from 5200 yuan / ton line, continuously wear 20 days, 40 days moving average, successfully 60 days of moving average, 1909 contract single day deal is once reached 5 million 700 thousand hands.

According to price monitoring, the domestic PTA spot market in June showed a sharp rebound after the first shock adjustment, and the average market price in June 28th ended at 6366 yuan / ton, up 11.34% from the beginning of the month, up 8.45% over the same period. The futures market also maintained a strong momentum, of which the June 27th PTA futures contract closed up, up 5.02%, reported 6026 yuan / ton, refresh the two month high.

According to price monitoring, in the 06 months of 2019, there were 6 kinds of commodities in the rise of the commodity prices in the month of 2019. Among them, there were 6 kinds of commodities which rose by more than 5%, accounting for 23.5% of the total number of commodities monitored. The top 3 commodities were PTA (11.34%), polyester FDY (10.56%) and polyester (9.92%).

Lido concentrated release, short-term PTA still has a head!

In the short term, from the improvement of polyester link demand, PTA supply to the warehouse, cost support, and the easing of Sino US trade friction, the short-term trend of PTA showed a strong rise. These advantages support temporarily.

1, polyester starts to pick up, supporting the rigid demand for PTA.

After mid June, polyester load has picked up for two consecutive weeks, reaching a high of 92.2% in June 21st, ending the downward trend since the beginning of May. This change shows that the demand for polyester links has improved significantly. The two major factors that affect the start up of polyester products are polyester stock and polyester product profit, among which polyester stock is the main pressure on the decline of polyester starting since the beginning of May.

From the transmission path, it is "downstream weaving inventory backlog: weaving starts to decline" to reduce polyester products procurement to the overall downstream low season performance ahead of time to reduce PTA demand.

After mid June, the main improvement came from the intermediate links, that is, the passive replenishment of weaving led to a decline in the stock of polyester products, thus boosting the recovery of polyester products. In May, when polyester stocks were on the high side, polyester factories generally used the way of price promotion to try to digest inventory, but under the influence of buying or selling, the procurement of weaving links was basically based on rigid demand procurement, and the effect of price reduction on polyester production and marketing rate was not very satisfactory.

After June, polyester products were lowered in the low profit situation, and the price of polyester products increased. Under the influence of buying up sentiment, the purchasing mood of the downstream businesses increased, and polyester factories became more obvious after the high-yield sale before and after the Dragon Boat Festival. With the continuous adjustment of polyester prices, the demand for passive replenishment of the downstream was stimulated. In this case, polyester stocks dropped significantly, the data show that the current level of inventory is POY1.5 days, DTY19 days, FDY3 days.

In the case of significant improvement in inventory, the decline in power of polyester factories started to decline in the short term. With the restart of small and medium sized pre maintenance devices, polyester started to improve gradually, thus supporting the rigid demand for PTA.

2. The frequent opening and stopping of the PTA device results in a phased out trend of PTA.

The phase of polyester links is good, corresponding to the instability of PTA supply. From the differentiation trend of PTA and polyester start-up, it can reflect the signs of supply and demand mismatch, and when demand first and supply rebounded, the weak supply and demand expectations will be shifted in the "PTA- polyester" link, which will be favorable to the price of polyester raw materials.

Specifically, in June, the capacity of PTA overhaul involved 9 million 900 thousand tons, of which 2 million 275 thousand tons were affected by negative impact, and 6 million 700 thousand tons were planned to be overhauled later. This week, with the restart of Sichuan's energy investment and Peng Wei petrochemical plant, the capacity of overhaul and down load will drop to 1 million 850 thousand tons. Affected by this, the operating rate of PTA has been significantly reduced since the beginning of June. The CCFEI data show that the average operating rate of PTA in June dropped to a minimum of 76.8%, which is lower than that of 78.8% in the same period last year. With the restart of the device, the operating rate also rose to 82.8%. It is estimated that the PTA utilization rate will rise further this week.

However, in early July, if the maintenance of Fuhai's 4 million 500 thousand ton plant is going on as scheduled, the operating rate of PTA will fall again. Although the new PTA plant has been put into operation in the second half of the year, the capacity base has been raised by 1 million tons. However, the decline in operating rate still has a mitigating effect on the stage supply.

Demand rebounded and supply reduction reduced the ease of supply and demand of PTA- polyester from easing to tighter. This also contributed to the de conversion of PTA stocks. CCFEI data showed that in early June, PTA inventories were at 1 million 69 thousand tons, higher than the same period in 2018. In June 21st, inventories dropped to 1 million 1 thousand tons, although the market was still slightly higher than the same period last year, but the ring ratio showed signs of becoming worse.

The supply and demand of PTA- polyester will also show a slight decline in June, and the trend of 1-5 month storage will be reversed. If the state of polyester high start and PTA overhaul continues, it is expected that the supply and demand of PTA- polyester will continue to be in store in July.

3, the impact of the rebound in oil prices is too much, to form a rising base for PTA.

The impact of cost side on PTA in the two quarter is "more before the empty space", and the performance of "front empty" has two steps.

The first step is that since April, the price of PX has dropped significantly from the $1100 / ton drop to 800-900 USD / ton as a result of the impact of the operation of Hengli petrochemical refinery. At the same time, the processing price difference of PX- naphtha and PX-MX also showed a significant compression. In the initial stage of the price differential compression, the price of naphtha and MX remained relatively strong, indicating that the decline in PX prices was mainly affected by the expected supply and demand of their own, rather than the drag on the decline in raw material prices.

Affected by this, the price of PTA also declined, but the driver of the fall came from the collapse of the cost. This shows that the price of PTA has fallen, but the PTA processing fee has not gone down.

The second step is the fall in crude oil prices in the middle and late 5 months, and the PX and PTA decline deepened. After the processing fee is reduced to a low level, PX's sensitivity to crude oil price rises, and its own supply and demand pattern shows that it is easy to fall and rise. PTA superimposed the impact of the downstream off-season ahead. Under the drag of crude oil prices, the processing cost of the PTA link was compressed, which drove the second round of PTA decline.

After the middle of June, the transition from end to end was "excessive". The price of crude oil has been shaken for some time in the range of $50-55. That is to say, the macro pressure will be postponed, the financial interest will be postponed, the premium will go up, and the supply and demand will be weak before strong. China and the United States have reached a consensus that the talks between heads of state of the two countries will be held at the G20 summit. If the G20 talks can reach a certain degree of truce agreement, it will help to alleviate the over pessimism of the market.

And crude oil rebound, so that domestic chemicals in the overall atmosphere improved, also broke through the previous low shock interval. Affected by this, prices of PX and PTA have dropped. But the difference is that due to the difference between the supply and demand pattern of the two, the increase of PTA is greater than that of PX under the same stimulation of crude oil, which shows that the repair of PTA processing fee is obviously stronger than that of PX. It shows that the uplink of PTA is not only supported by cost side, but also due to the improvement of its phased supply and demand pattern.

To sum up, after the middle of June, the uplink of PTA was due to the release of many kinds of interests. The trade frictions between China and the United States released some signs of relaxation at this stage, which led to the divergence of the same mentality. There has been a positive expectation, and PTA is also expected to see a strong rise in this market expectation.

Long term upward pressure still exists: how long can the high processing fee of 1700 yuan last?

At present, the low inventory and high load start up situation has stimulated the demand of PTA, coupled with the rebound of crude oil price at the end of cost, PTA futures prices have been supported in the short term. However, PTA processing fees reached a high level of 1700 yuan / ton, and there are subtle changes in the situation.

At present, PTA downstream polyester links are performing well, inventory pressure is released, production is steadily picking up, and short term favorable price is expected, but a large number of new capacity production is expected to start in the second half of the year. PTA's better profits will no longer exist, but the profit will be greater, but it will mainly be reflected in the far month contract.

1, a large number of new production capacity is expected to start in the second half of the year.

This year is still a small year for the PTA plant. In the first half of June, only Sichuan could invest 1 million tons of equipment to complete the new investment. However, the device stopped at the beginning of the year because of the reason, so far it has not yet been restarted, so although it has been put into operation at the end of May, it has not significantly increased the supply of the market.

Recently, the news of the 2 million 500 thousand tonnes of new Feng Ming in September has been put into operation in September, although it is consistent with the original planned production time of the device, but it still exceeds the market expectations, because historically the commissioning of the PTA plant will often be delayed, but this year, the successful production of Hengli Petrochemical's PX plant has given the market a new understanding of the commissioning of the new plant. We expect that the new Feng Ming PTA plant and the Hengli phase of the year end plan will be put into operation.

As the price of PTA continued to fall, the spot processing fee was also reduced to about 1000 yuan / ton. The processing cost of the 1909 contract was even lower than the 700 yuan / ton level. In June, several sets of PTA devices in China were overhauled for reasons, and planned to stop for 2 to 3 days. Although some devices failed to be restarted within 3 days according to the plan, most of them resumed production in late June. Therefore, the mid June device repair caused a short supply of goods, while pushing up PTA processing fees, and high processing fees stimulate enterprises to actively resume production.

In late June, with the reboot of the overhaul device, the market supply obviously recovered, and the overhaul of the device was no longer available. It can be said that the overhaul of this round of overhaul has a short effect and does not have the power to continue to push up the PTA price.

Overall, a large number of new capacity production is expected to start in the second half of the year, PTA better profits will no longer exist, the bad power is greater, but mainly in the far month contract. Judging from the recent performance of the disk, the contract in recent months was significantly stronger than the contract in the far months. After November, the contract rebounded slowly, which also reflected the bad performance of the new capacity in the future.

2, downstream polyester smooth conduction, terminal weaving can be reasonable to go to the library?

From the end of May to the first half of 6, as the price of polyester dropped to a low level of nearly 3 years, weaving enterprises entered the market to buy a lot of raw materials, and a large number of raw materials were purchased. The stock of polyester factories quickly shifted to downstream weaving factories, and the stock of polyester factories dropped to the low level in the same period in recent years, and profits also improved significantly. Therefore, the equipment load level of polyester industry has risen from low level, and has increased consumption of raw materials, which is directly favorable to PTA in the short term.

After weaving a large quantity of raw materials, the load of the loom is also improved. But whether the good end of the consumer can continue, the key lies in whether the products of the weaving factory enter the downstream textile and garment links, and then flow to the consumers. At present, the market reflects the fact that the terminal orders are not optimistic, but the bad time needs to go down over time, and the downstream inventory will be gradually overloaded, so that they can gradually be transferred upward and restrict the raw material market.

From the retail situation of terminal textile and apparel, retail sales in the first 5 months of this year are significantly lower than those in the previous few years. Export data showed that textile exports in May increased by 3.55% over the same period last year, while garment exports fell by 1.09% over the same period last year. In addition, the Sino US trade situation is directly related to the increase of tariffs of US $300 billion on exports to the United States, including textiles and garments, thus directly affecting the export volume of textile and clothing. Recently, some export orders will not be excluded, which will directly benefit the upstream raw materials. However, it is still necessary to observe whether such a large quantity of raw materials for weaving factories can be digested.

To sum up, the recent rise in the price of PTA has a direct bearing on the significant reduction in polyester link stocks, and other factors such as the rebound in crude oil and the easing of trade relations between China and the United States have contributed to the surge. Short term market bull mood catharsis, plus the impact of futures market speculation, good short-term profits will continue to ferment.

But from the long-term perspective, whether polyester stocks can be really digested after the transfer of polyester stocks to downstream weaving factories, whether Sino US trade relations will be repeated again and again, whether crude oil can continue to rebound or not, there are uncertainties in all kinds of profits, and at any time may end the bull's mood. In the medium to long term, after the PTA processing fee goes back to the historical high level, the profit of other links is very low, and the possibility of downstream acquisition is limited. At the same time, the PTA processing fee has reached 1700 yuan / tonne, and the production enthusiasm of the device is higher. Some maintenance plans of the device may be cancelled again. In the first half of July, Fuhai set up 4 million 500 thousand tons of equipment to overhaul or make the market supply temporarily tight, but the surplus pressure will appear again in the middle and later ten days after the device is restarted.

Thus restricting the rise of the PTA price space, and PX and PTA new devices put into operation with a higher certainty, the pressure on the far month contract is more obvious. (source: Business Association, futures daily, CITIC futures)