OPEC Reduction Of VS Polyester Terminal Acceleration Loss, How Will The Polyester Market Before Operation Run?

In December 6th, a two day reduction conference was held in Vienna, Austria, and a new production reduction agreement was signed by the OPEC+ organization composed of the oil exporting countries (OPEC) and oil producing countries such as Russia. The OPEC+ group has decided that by the end of March 2020, the production rate of the original 1 million 200 thousand barrels / day will be increased to 1 million 700 thousand barrels per day. Surprisingly, Saudi energy minister Abdul Aziz also said that the production will be further reduced on the basis of the OPEC+'s cut in production, which will reduce production by 400 thousand barrels per day on the basis of production quotas. This means that the total output of OPEC+ will reach 2 million 100 thousand barrels per day, and the output of Saudi Arabia will be the lowest level since 2014. The OPEC+ will eventually lose 2 million 100 thousand barrels per day, which is equivalent to 2.1% of the current global crude oil demand.

Crude oil cost end support, recent polyester raw materials also rebounded. PTA has been affected by the new commissioning of the plant this year. Since October, the new Dushan energy phase PTA device has been put into operation since October, and the processing area of the PTA has been down and down for a period of 400 yuan / ton. Although there are still some marginal profits for some new installations, the overall profit level has shrunk considerably. At present, the mainstream trading price of PTA market is closed at 4830 yuan / ton. From the perspective of the whole polyester industry, the total polyester start-up has recently been reduced to 86.42% by the Hengsheng overhaul, the remote spinning restart and the new Phoenix maintenance. Although more overhaul is expected in December, polyester production is still slightly higher than the same period last year, up 2.98 percentage points over the same period. Therefore, from polyester demand for raw materials, it does have some support in the short term.

Since November, there has been a continuous parking of pet terminal weaving and firing, especially in some parts of the weaving area, and the polyester link has also released the maintenance and reduction plan before and after the Spring Festival.

The terminal concentrates on accelerating parking in late December. The overall 4 quarter of high inventory of grey fabric makes weaving factory cash flow slightly tighter. Near the Spring Festival, many weaving factories need to ship and withdraw funds. On the one hand, they pay wages, and on the one hand, they reduce the amount of raw materials and prepare new raw materials. Shipments are difficult, especially water jet cloth, and tight funds, coupled with the weakness of raw materials and product prices before the year, the enthusiasm for production was relatively low years ago. Therefore, judging from the current feedback messages of terminal looms, the looms for Spring Festival holidays earlier this year. Up to now, the operating rate of Jiangsu and Zhejiang looms has dropped to around 62%. It is expected to begin to drop to 40-50% near the end of December, and the 12 monthly commencement is expected to drop to 55%.

At present polyester factory stock pressure is limited, but the profit level is not optimistic. Both POY and FDY have entered the deficit. Many factories and factories in the polyester plant have been overhauling and reducing production plans before and after the Spring Festival. Some factories have added new overhauls outside the original maintenance plan, such as Tiansheng and Da wo. From December to January, the polyester plant concentrated on the production of about 9 million 500 thousand tons per year. Among them, in early December, after a partial maintenance and production reduction, there was less maintenance in the middle of the month, but from late June to mid January, it was the most concentrated period of maintenance and production reduction. The low polyester load is expected to appear in mid January, around 75%. At present, polyester is the highest proportion of polyester in the maintenance forecast, and FDY is relatively low because of the original start up. Therefore, further reduction of output is limited. POY

To sum up, the supply of PTA is controlled by factory maintenance in the short run, and the overall supply of the market is still acceptable. However, with the implementation of the polyester plant maintenance plan, the polyester demand side's overall support is insufficient. Considering that the four phase 2 million 500 thousand tons of Hengli and the new 1 million 200 thousand tons of Xinjiang and China Thailand will be put into operation at the end of this month, the PTA rate will remain weak before the Spring Festival. Later, we must focus on the macroeconomic situation and the trend of international crude oil prices.