PTA Production Increased, Terminal Orders Less Than Expected Polyester Market To Fall

Recently, international oil prices are rising steadily. The bull market continued to support the market, and oil market continued its rally on Monday. On Tuesday (September 10th), crude oil futures rose fifth days to nearly six weeks high.

Over the years, international crude oil is the biggest supporting factor for polyester raw materials. Instead, in recent pet market, with the rising cost of upstream raw materials, the polyester market has ushered in a sharp decline. Why did the crude oil as a "strong agent" of polyester market fail?

The pressure is not only coming from Hengyi refining and chemical industry, but also the "interception" of oil price rise.

In recent days, the change of capacity equipment has been changing the market again and again. Since the commissioning of private large-scale refinery plant has been the focus of the market. In September 6th, Hengyi Petrochemical announced that its Brunei refinery project has produced qualified products and is expected to be produced by PX in late September. In the first half of the year, the Hengli PX plant put into operation led to overcapacity in the market, which is expected to make the price of PX plummet.

The pressure is not only coming from Hengyi refining and chemical plant. Last week, Fuhai second PX devices have been restarted and operated at low load. Liaoyang petrochemical PX capacity expansion to 1 million tons, at present close to full load operation. The Sinochem Hongrun PX plant was put into operation at the end of July. Hainan refining and chemical PX two phase project is planned to go into operation at the end of September. It has caused great pressure on the recent market. Last week, PX traded contracts for another month, and the price fell below 780 US dollars / ton.

A piece of news has fallen off the market, and the problem of the PTA device has been uneven.

The 10 day PTA plant has also been regenerated, it is understood that the Yizheng Petrochemical repair device to restart the temperature, while there is news that Hengli Petrochemical may cancel the maintenance plan, this blockbuster immediately let the original oil price rose slightly PTA main futures again turned straight.

In addition, Fuhai 4 million 500 thousand tons of equipment now load about 8 percent, the 600 thousand tons of Jialong petrochemical plant plans to restart in early September, the current PTA effective production capacity of about 97% of the load has been almost full load, with the restart of the maintenance device to lift negative, PTA operating rate is still high, Hengli may cancel mid September overhaul plan is undoubtedly worse, in the short term, the trend of PTA storage will continue.

In the medium to long term, the new PTA device with 2 million 200 thousand tons / year has been trial run, and is expected to be put into operation in September or October. By then, with the increase in production and load, the supply of PTA will gradually increase, and PTA will gradually enter the stage of oversupply.

In 2018, PTA did not add new devices, but PTA's effective capacity increased significantly. In 2018, PTA production was 40 million 686 thousand and 500 tons, up 13.68% over the same period last year. In 2019, the new PTA plant, Sichuan Shengda 1 million tons, has been put into operation in May 22nd, and is now running at full capacity. The following 2 million 200 thousand tons of new Feng Ming and 1 million 200 thousand tons of Zhongtai and Kun Yu are expected to be put into operation in September and December respectively, and PTA production capacity is gradually increasing.

In the later stage, the production quota of PTA will be raised because the new Feng Ming device will be put into operation in September or October. With the continuous improvement of the new Feng Ming PTA plant load, the total output of PTA will gradually increase.

Grey fabric removal is not ideal, and terminal demand is weak, which determines that polyester price rebounding is highly limited.

The current terminal orders follow up less than expected, terminal gray cloth to the library is not ideal, since September polyester price low consolidation. On the one hand, the price of the upstream PTA continues to slide; on the other hand, the demand for terminal textile and apparel in September is not as good as expected. Therefore, at the end of the cost price center of gravity shifted downward, terminal demand slowly recovered but still not strong enough, polyester link profit although repaired better, but the lack of price support and pull.

"Golden nine silver ten" peak season is expected to raise the price of polyester limited. With the advent of the traditional peak season for polyester consumption, polyester prices have dropped to a historical low point. When the marginal demand has improved, polyester prices are expected to stabilize gradually, and the strength of terminal demand will determine the height of pet price rebound. Constrained by the current global sluggish macroeconomic environment, demand for polyester will be weaker this year, despite the seasonal improvement in demand in 9-10. Therefore, even if polyester prices rebound, the rebound is expected to be limited.

On the whole, Hengyi Petrochemical announced that the large refining and chemical project will be put into operation, and PX will also be gradually mass-produced. Fuhai creates a 800 thousand ton capacity to complete the restart. The Hainan refining and chemical PX project is planned to be put into operation in late September, and the upward pressure on PX price will be huge in the future. Last week, polyester enterprises continued to pick up, and polyester production and sales were also more active than before, which generally supported PTA's peak season. But with the restart of the maintenance device, the PTA operation rate has risen to a high level. Hengli may cancel the overhaul plan in mid September. It is no doubt that the trend of PTA storage will continue. It is expected that the PTA will show a weak trend in the near future.