PTA Social Circulation Stock Has Exceeded 2 Million Tons PTA Is Still Facing Callback Pressure.

In recent years, the spread of the new crown pneumonia epidemic across the globe has continued to detonate market risk aversion, and the global stock market and commodity market have seen a sharp decline. The number of confirmed cases abroad has been increasing, and panic has been pressing down on the price of crude oil. The US oil week fell more than 15%, while the PTA price also started two rounds of exploration.

Abrupt: epidemic situation leads to insufficient follow-up of downstream demand; status quo: outside the epidemic, the terminal's internal and external needs are weak.

In this sudden public health event, the most influential PTA industry chain is the terminal weaving enterprise. When the downstream is able to resume production, it becomes the most worrying topic in the market. Although many enterprises plan to return to work after mid February, they are limited by the escalation of protection measures by the local governments and the traffic control and quarantine period of workers returning from other places. Up to now, the comprehensive opening rate of chemical fiber weaving in Jiangsu and Zhejiang is only 38%.

From past years, weaving enterprises can normally enter normal production after 2 to 3 weeks after the Spring Festival. This year, with the impact of the epidemic, weaving factories can only be restored gradually at the beginning of March, and the demand is lagging behind for at least one month.

The slow recovery of production in weaving factories has led to the difficulty in starting load of polyester factories. Under the pressure of poor sales, the production capacity of the polyester plant in February dropped by 4 million 670 thousand tons, plus the device before the Spring Festival to postpone the restart plan. At present, the load of polyester factories is only 64%. Nevertheless, the stock of polyester plant is still rising.

Up to now, the POY, FDY and DTY stocks of major pet products have risen to 29, 30 and 36 days respectively, 2 to 3 times over the same period last year, or even much higher than last year's peak stock prices. But before the weaving Market is fully reopened, the production and marketing of the polyester plant is not good enough, or the stock of polyester manufacturers continues to increase. In a short time, the start-up rate of the polyester plant is difficult to increase significantly, thus dragging down the PTA demand.

Despite the impact of the epidemic, the terminal market is still facing a bad situation. From terminal domestic demand, more than 70% of pet terminals are related to textile and clothing, so it is necessary to judge the strength of polyester demand according to the sales situation of textile and clothing. Because textile and apparel belong to daily consumer goods, its general trend is highly correlated with the overall economic situation of China GDP. From historical data, China's economic cycle lasted about 4 years.

The current polyester boom cycle began in the second half of 2016, and profits have entered a deficit. Sales of clothing have peaked at the beginning of 2018, and the growth rate has been maintained at a low level of 3%. The current growth rate of GDP is low. Therefore, even if there is no outbreak of the textile and clothing domestic demand, it will remain weak until at least the first half of 2020.

On the other hand, the terminal external demand is not optimistic. In 2019 1-11, the export of textile yarn, fabrics and products, clothing and accessories in China decreased by 3.09% compared with the previous year. The overall growth rate in 19 years has dropped to a higher level than in previous years, and has entered a negative growth stage. And with the uncertainty of Sino US relations and the anticipation of the global economic downturn, it is expected that the export situation will still not improve in the short term.

In addition, in recent years, domestic terminal textile and garment enterprises have also increased their capacity transfer to Southeast Asia and other regions, as well as the rapid development of the textile industry in Turkey and Brazil, leading to a reduction in the direct export of domestic textile and garment products.

Supply is still a hidden danger for a long time, and the PTA processing fee has entered the stage of careful calculation.

I remember 2015-2016 years ago, the main logic of market operation at that time was to set up the running interval of PTA according to the processing fee, which is a special product of the stage of industrial clearing under the background of overcapacity. Subsequently, PTA was put into a business cycle due to the delay in production capacity, and the logic of processing fees became less important.

In 2020, the domestic PX capacity increased sharply, reducing the cost of PTA production, and the raw material cost of PTA decreased by nearly 2000 yuan / ton compared with the same period last year. However, the huge expansion of PTA capacity failed to make the PTA industry taste the sweetness of upstream profits. Since the end of 2019, the release of new Feng Ming, Xinjiang Zhongtai, Hengli petrochemical and other devices has directly increased the capacity of nearly 6 million tons, while PTA devices are generally less affected by special events. With these new capacity forming market supply, PTA capacity growth is far greater than that of polyesters production capacity, and PTA supply is relaxed. The PTA spot processing fee has dropped sharply in recent years and has remained at a low level near 400 yuan / ton. The processing area will be compressed to a lower interval again. According to the idea of processing fee, it will return to the public view again.

Citing PTA cost estimates, the processing fee will fluctuate in the 300-500 interval in 2020, with a high ceiling of around 600, which means cash flow cost of old small devices.

Under the pessimistic expectations, the industry chain's active library strategy is affected, and the hard days are just beginning.

Since the first half of 19 years, the polyester industry has a characteristic that the production cycle is expected to fall, and the demand uncertainty caused by the trade war is superimposed. The whole industry is in an active process of going to the warehouse (the whole chemical industry has similar characteristics). Polyester links are the most obvious.

According to past experience, polyester stocks can tolerate a certain amount of accumulation in inventory stage. In the second half of the year, we have seen a significant increase in pet promotions, and are willing to give profits to the downstream in the case of their own efficiency, so as to ensure their low inventory operation. But the polyester end and the weaving end are not very high due to pessimistic anticipation, so the whole industry chain inventory is relatively low.

Therefore, if the upstream industry chain of polyester industry is expected to improve after the commencement of the holiday, the price increase caused by the improvement of supply and demand fundamentals will not be mentioned. Speculative replenishment will only bring about a rebound, especially for those with ultra-low inventory. But during the Spring Festival, the mismatch of the PTA and downstream markets began to overlap with the release of new capacity. Even without the outbreak, it would be enough for the market to start a difficult day.

Under the influence of the new crown pneumonia epidemic, the downstream demand after the Spring Festival has not been followed up, which has accelerated the situation of PTA factories. As of last week, PTA social circulation stock has exceeded 2 million tons. High inventory and low cash flow inhibit the production intention of PTA enterprises. Since February, a number of devices have been passively reduced. At present, the overall operating rate of the PTA industry is 79.9%. In the whole industry chain, the load of PTA plant is still high. If the stock pressure continues to increase in the future market, it will force more PTA enterprises to reduce production and reduce production.

Recently, the epidemic began to spread abroad, and the market anxiety was rekindled. The PTA price also started two times. In short, the current epidemic situation has not yet been completely lifted, and the complete recovery of terminal weaving enterprises still takes time. High storage in the industry is also urgently needed to digest, and the PTA market is still facing the pressure of callback. (source: Hongye futures, Yide futures, network)