Slow Down Downstream Slow PTA Pessimism Enveloped

Against the backdrop of surging supply, the PTA market in 2020 was extremely pessimistic. The outbreak of a new crown pneumonia earlier this year swept across the country, dragging down downstream demand. After the holiday, the PTA price jumped sharply. Although there has been a rebound in recent days, the contradiction between supply and demand of PTA has increased in the wake of the general delay of the resumption of the terminal industry this year.

1, there is no support for cost ends.

The outbreak of public health events triggered the market's concerns about the future oil demand. With the decline of crude oil prices, the PTA market was bleak. Although the recent price rebounded slightly, the market weakness has not yet been reversed.

In 2019, China's new PX production capacity increased by 8 million 330 thousand tons, and its capacity growth rate reached 57%. The substantial expansion of raw material terminals increased the pressure of the polyester industry chain. At present, the domestic PX utilization rate is around 78%. After that, second PX tons of 2 million tons of Zhejiang Petrochemical Company have been opened, and the overall supply of PX continues to improve. With the release of new capacity, PX processing fees drop and drop, the recent PX- naphtha spreads continue to be around 250 US dollars / ton, PX industry profits are hard to get better, and the cost side of PTA has no support.

2, increasing supply pressure.

Since January 2020, the new production capacity of Xinjiang Zhongtai Kun Yu and Hengli petrochemical 4# has been released, which has brought an increment of 3 million 700 thousand tons / year. Although some parts of the plant have been overhauled or lowered in recent years, the capacity loss in February has been about 700 thousand tons. However, the overall operating rate of the PTA industry is still at a high level of about 82%. Compared with the low load of the downstream market, the PTA supply side pressure is more obvious.

At present, the raw material cost of PTA is about 3860 yuan / ton, and the spot processing fee is only 400 yuan per ton, so the manufacturers are basically at a loss. At present, the PTA manufacturers' stock is about 10 days, and the raw material reserve of the polyester plant has about 12 days. If the downstream market is not expected to work again, and the demand is not enough, the PTA link will be accelerated. Then the PTA processing fee will be compressed again, so that more manufacturers will add to the reduction of production.

3, the demand is hard to recover.

The difficult problem of reemployment caused by the epidemic has plagued the market, and the polyester industry chain is more sensitive to the epidemic response to the downstream. At present, the main weaving enterprises' reemployment time is generally postponed after mid February, but due to the 14 days' isolation period after the Limited Logistics overlapped processing, it is optimistic that the weaving enterprises will be able to get normal in early March, and the capacity of the areas with serious epidemics will be resumed even later.

During the Spring Festival, the mismatch of the polyester industry chain has increased the inventory pressure in the upstream market, and this year's epidemic factors will directly lead to a reduction in demand for about a month. When the terminal is delayed, the volume of new polyester production will be greatly reduced this year.

It is understood that some of the polyester manufacturers due to insufficient accessories, the device production further increased. Up to now, the polyester start-up load has dropped to below 60%. Even so, the inventory of various products is still increasing rapidly. The late polyester storage is still expected to be obvious, thus dragging PTA inventory digestion.

To sum up, under the influence of the current epidemic situation, the hard core policy of epidemic prevention is frequent, the resumption time of terminal enterprises is difficult to guarantee, and the polyester factory is also continuing to reduce load. Later, PTA faces greater pressure of storehouse. Under the background of intensified supply and demand contradiction, it is expected that PTA will still be dominated by weak oscillation and should not participate in the rebound. (source: futures daily, network)