New Capacity Launch Near PTA Rise Is Not Firmly Established

Recently, Saudi oil field attack broke the original weakness of PTA. The decline in oil supply is good to the downstream sector, and the cost is rising to push the PTA price upward. However, at present, Saudi Arabia is actively recovering oil supplies. In the near future of new capacity production, the PTA price will face greater upward resistance.

Cost driver reduction

During the Mid Autumn Festival, Saudi oil fields were attacked, resulting in 5 million 700 thousand barrels of crude oil daily supply, that is, 5% of the world's oil supply was affected, and 16 international oil prices rose. However, Saudi Arabia's Abqaiq plant has resumed production and some of its capacity has been repaired. Although it will take more time to fully recover to the level before the attack, oil prices have returned to below US $60 / barrel under the impact of news.

The current Asian PX price has increased by 67 US dollars / ton compared with September 13th, driving the cost of PTA to rise by nearly 360 yuan / ton. However, the rise of PX is still inferior to the upstream, resulting in the contraction of PX- naphtha oil price to less than 300 US dollars / ton, that is to say, the production link of PX has been losing money. Taking into account the Hainan refinery, Hengyi Brunei, Zhejiang petrochemical and other PX sets of new devices will be put into operation in the 4 quarter, the late cost side is difficult to provide enough support for PTA.

The pressure of increasing production is bigger.

The increase of supply in the future will be the highlight of the PTA market. The 3 phase of the new Phoenix and Hengli petrochemical works are planned to be put into operation in October. The production capacity of Xinjiang Zhongtai Kun Yu is expected to be released in December, with a total capacity of 5 million 900 thousand tons / year. Once these new capacity is produced, PTA supply will show a relaxed situation. Even if the late production is delayed, there are still 11 million 700 thousand tons of capacity expected to be released in 2020, and the pressure to increase production in the future can not be underestimated.

Up to now, the capacity of the unit that has not been overhauled during the year is about 1/4. According to the average maintenance time of 15 days, the production capacity is about 510 thousand tons. If Xinjiang Zhongtai Kun jade was put into operation in 2020, the 2 sets of production capacity of new Feng Ming and Hengli will be put into operation in November this year, and the total output will increase by about 780 thousand tons in 11-12 months, and the PTA storage pool is expected to increase. At present, the profitability of PTA manufacturers is not optimistic, and spot processing fees have dropped to the lowest level since the 2 quarter. Under the expected increase in production, processing fees or compressing space.

No bright spots in polyester consumption

This year, the new capacity of polyester has been put in an orderly manner. Up to now, 2 million 900 thousand tons have been released one after another. The operation cycle of all links in the industrial chain is not synchronized, so that market profits can be transferred among all sectors. In the first half of the year, PX profits dropped, making PTA production profits increase. As the new PTA production capacity approached, the profit of pet market has improved since the 3 quarter.

However, compared with the upstream price increase, polyester factories are obviously insufficient, which results in the cash flow of various products showing different degrees of compression, the profit decline or the new production capacity being delayed. National Day holiday approaching, part of the terminal weaving enterprises operating rate decline, polyester stocks or climbed. Overall, downstream polyester consumption is not bright enough to boost the PTA market.

To sum up, with the gradual resumption of Saudi oil supply, PTA comes from the weakening of cost drivers. At the same time, the new capacity of PTA is approaching, and the supply will show a relaxed situation.