Polyester Factory Cut Production Is Coming Soon, PTA Price Is Hard To Overcome

In the twinkling of an eye, 2019 is drawing to a close. It is less than two months before the Spring Festival. The reason why the price of PTA and the downward trend of the center of gravity are very obvious are mainly the large number of PTA new installations put into operation in the fourth quarter, especially the large scale refinery supporting PX new installations. At this stage of the transformation of the supply pattern, coupled with the Spring Festival approaching, polyester factories have reported maintenance plans, and PTA has become more determined.

Figure 1 PTA price and profit trend

Source: lung Chung

In 2019, the PTA market was affected by factors such as cost, supply and demand, processing fees, and the new installations of polyester industry chain. The performance in the first half of the year was acceptable, but with the launch of the new PTA device, especially in the three or four quarter, the new PX installations were put into operation. Then, after the new 2 million 200 thousand PTA PTA device was launched in October, the whole polyester industry chain was reshuffled, and the profit transmission would be redistributed. By the end of November, PTA decreased from a high processing fee of 1187 yuan to 600 yuan in the first half of the year, a drop of more than 50%. The price of PTA also dropped from the average price of 6314 yuan / ton in the first half year to the current 4800 yuan / ton, which dropped by more than 24%. With the gradual increase of new production capacity, both the upward PX and the down polyester plant cost have also entered the margin of loss, and later PTA processing fees or further create a new low.

Oversupply is evolving.

Table 12019 PX and PTA capacity launch

product	Enterprise name	Capacity (10000 tons)	Commissioning time
PX	Hengli petrochemical	Four hundred and fifty	Two thousand and nineteen year
	Sinochem	Sixty
	Hainan refining and chemical industry	One hundred
	Brunei	One hundred and fifty
	Zhejiang Petrochemical phase I	Two hundred
	Total	Nine hundred and sixty
PTA	Sichuan Shengda	One hundred	Two thousand and nineteen year
	New Feng Ming	Two hundred and twenty
	Xinjiang, China and Thailand (not voted)	One hundred and twenty
	Hengli Petrochemical (not voted)	Two hundred and fifty
	Total	Six hundred and ninety

Source: lung Chung

Table 2 new PTA capacity in the future

Enterprise name	Capacity (10000 tons)	Province	Commissioning time
Hengli Petrochemical 5	Two hundred and fifty	Dalian	Two thousand and twenty year
Ningbo Yisheng	Three hundred and thirty	Zhejiang	Two thousand and twenty year
Honggang petrochemical	Two hundred and fifty	Jiangsu	Two thousand and twenty year
Taiwan (Xingye)	One hundred and fifty	Zhejiang	Two thousand and twenty year
Taiwan (Xingye)	One hundred and fifty	Zhejiang	Two thousand and twenty year
Fujian Bai Hong	Two hundred and forty	Fujian	Two thousand and twenty August 2013
Hua Bin petrochemical	Two hundred and twenty	Zhejiang	Two thousand and twenty-one year
Hon Bang petrochemical	Two hundred and twenty	Tianjin	Two thousand and twenty-two year
Tung Kun petrochemical	Two hundred and forty	Jiangxi	Two thousand and twenty-two year
Tuen River in Lanshan	One hundred and twenty	Xinjiang	Two thousand and twenty-two year
Total	Two thousand one hundred and seventy

Source: lung Chung

In the second half of 2019, the production of PX and PTA began to start. Many large private enterprises such as Hengli petrochemical, Zhejiang petrochemical, Rong Sheng petrochemical, and state-owned enterprises such as Sinochem Quanzhou have launched an integrated refining and petrochemical plant. Combined with their own capacity structure and scale advantages, they have equipped corresponding PX and PTA capacity. In 2019, PX added 9 million 600 thousand tons of new capacity, and the new capacity of PTA was 3 million 200 thousand tons as of the end of November. Whether PTA or raw material PX can be put into operation in 2020 will achieve rapid growth, and will gradually enter the stage of relative excess capacity, and the competition in the industry will become more intense.

Polyester production and maintenance of Spring Festival is coming.

Since entering the fourth quarter, new polyester production capacity has been put into operation in China, and the supply pressure of polyester products has been increasing. Enterprises are also reducing sales promotions, but they are useless, and the cost end support is not enough, so that the core of polyester filament is constantly being explored. At present, besides POY, the cash flow and profit of polyester staple fiber, polyester bottle, polyester chip and PET bottle are shrinking continuously. The downstream terminal textile orders have also entered the off-season. Therefore, pet manufacturers take more measures to reduce risks and avoid risks.

Source: lung Chung

At the end of November, many polyester factories began to slump in production and marketing, and manufacturers worried about inventory accumulation. Because of the Spring Festival ahead of schedule this year in January, many pet manufacturers reported year-end overhaul and down duty plans. Since 2020, China's large scale refining and chemical plant has been launched continuously. PTA production capacity has entered a new stage of rapid growth and slow demand. The situation of oversupply is difficult to improve. In the short term, the price of PTA is hard to change.