Production Capacity Increased Sharply, PTA Prices Will Be In A Weak Position In The Medium And Long Term.

Affected by the epidemic, the demand for PTA is flagging at present, but because of the low processing cost, the space for the price down is relatively limited. PTA is showing a dilemma.

There are concentrated production and suppression.

PTA production will be concentrated this year due to the production of tens of millions of refinery plants in East China. It is estimated that in 2020, China will have 16 million 600 thousand tons of new PTA capacity, while the downstream polyester production capacity will be only 533 tons. PTA will return to the surplus pattern from a tight balance before. In addition, affected by the new crown pneumonia epidemic, this year's domestic economic growth will decline, which is bound to affect the consumption of the terminal clothing industry. This year, PTA is in a clear pattern of supply exceeding demand. Price weakness is inevitable.

In the short term, PTA terminal weaving industry is strictly restricted due to the labor intensive industry. As of February 14th, the load of the domestic terminal weaving industry was only 8%, and two weeks after the Spring Festival last year, it has returned to 65%. 8% of the start-up load has not been seen in the past spring. The demand for terminal weaving is at freezing point, and the stock of polyester is limited. Polyester stocks show a continuous increase. As of February 13th, the FDY stock of polyester filament was 25.5 days, up 11.5 days from the same period last year, up 82.14% from the same period last year. The DTY stock of polyester filament is 33 days, up 22 days from the same period last year, up 200% compared with the same period last year. The POY stock of polyester filament is 24 days, up 15 days from the same period last year, up 166.67% over the same period last year. Due to the poor terminal consumption, the load of polyester started to decrease significantly recently. As of February 14th, the domestic polyester start-up load was 65.08%, down 10.45 percentage points before the Spring Festival. The reduction in start-up load of polyester enterprises has led to a decline in demand for PTA. At present, the PTA inventory of domestic PTA production enterprises has reached 9 days, the highest value since March 2014.

In the medium to long term, the overall weakness of PTA has been determined by the impact of centralized production capacity. Short term by the impact of the epidemic, PTA terminal consumption is not smooth, PTA, polyester industry backlog a large number of inventory, PTA prices are also under heavy pressure.

There is a low processing fee support.

The spot price of PTA continued to decline due to the combined effect of oversupply and weak consumption. Affected by this, the current PTA processing fee is only 424 yuan / ton, the industry as a whole is in a loss. Under such circumstances, PTA production enterprises begin to reduce load under the pressure of operation. Hengli Petrochemical 4, Fuhai create, three lane Helen, Zhejiang Li Wan polyester and other devices began to reduce operating load from the end of January to the beginning of February. Up to now, the start-up load of domestic PTA is 73.06%, which is 8.49 percentage points lower than that before the holiday. If the price of PTA continues to be weak, the load of PTA will further decline.

At present, the PTA processing fee is at a very low level. Therefore, under the premise that there is no significant collapse in the cost end, the PTA price will show a state of resistance under the support of cost. From the cost point of view, the international crude oil prices have rebounded recently, so naphtha prices have risen, and the production profit of PX has been further compressed. It is estimated that the price of PX is strong or supported by cost, the probability of cost collapse is very low, and the downside space of PTA is very limited.

Forecast for future market

To sum up, in the medium to long term, PTA will be affected by the sharp increase in capacity, and the price will be in a weak position. Short processing fee is still the main way of thinking. In the short term, PTA processing fees are at a very low level, while upstream oil prices are relatively low, and cost support is emerging. However, affected by the epidemic, the terminal weaving is basically in a state of stagnation. Under the condition of sluggish demand, PTA is difficult to form an effective rise. We believe that PTA is in a dilemma at the present time or maintaining the trend of low oscillation. Even if supported by cost, the price increases and the rate of increase is very limited. Under the condition of centralized production capacity and weak supply and demand, this is a counter operation and the risk return ratio is not good. It is recommended to wait for the epidemic to ease up. After the PTA has risen, it will be short when the processing fee is restored to 600 - 700 yuan / ton.