Summer PTA Is Not Easy To Cause The Price Center Of Gravity To Have Upward Momentum In 6 And July.

2020 is an uncommon year. Under the influence of public safety and health events, the global economy is in a halt. Transportation is limited, inventory pressure is high, demand is declining, and cost collapse is labelling the chemical sector. Meanwhile, the PTA industry has entered the "three high" market with high inventory, Gao Kaigong and high processing area.

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Since the beginning of this year, PTA has shown a weak downward trend. After experiencing the baptism of negative oil prices, PTA inventories and even high innovation, PTA futures prices once fell to 3100 yuan / ton. However, since May, the supply and demand pattern of PTA has improved slightly, of which 2009 of the contract has returned to 3700 yuan / ton.

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Despite the low implementation rate of some OPEC member countries in May, the OPEC+ announced in June 6th that the scale of production of 9 million 700 thousand barrels per day should be extended to July, and that 5 member countries that failed to fulfil their commitments in the 7 June period would be required to make additional production cuts.

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Recently, some operating platforms and drilling operations in the Gulf of Mexico have been closed due to the storm. The estimated crude oil production capacity is 635 thousand barrels / day. Meanwhile, Greece and Turkey in the Mediterranean region fought fiercely for crude oil control.

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In addition, the Sala oilfield, the largest oil field in Libya, was again occupied by armed forces and declared force majeure.

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Supply side turmoil, demand recovery gradually, oil prices in the long run will continue upward.

Normally, after a year of full load operation, the PTA production plant will have a corresponding maintenance plan for two to three weeks. According to our statistics, from 2019 to July, the planned overhaul and out of schedule parking accidents involved the PTA plant with a capacity of up to 15 million 800 thousand tons. This year's 6 to July there are also some devices that need to be overhauled, of which Yisheng Petrochemical has 6 sets of equipment in 6, 7 and August. The 2 million 200 thousand tons of Hon Bang petrochemical plant has been shut down since May 19th, and no news has been restarted so far.

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At present, the processing profit of PTA is at a high level of 800 - 900 yuan / ton, and some manufacturers may postpone the overhaul plan for profit consideration. But overall, the operating rate of the PTA plant will be at a low level from 6 to July. It is estimated that the operating rate will be below 85% in the whole month, and the pressure on PTA inventory will be eased. In addition, the PX naphtha oil price difference has dropped to the historical low of 170 US dollars / ton, and the space for continued compression is limited. It also provides support for PTA cost.

Under the influence of the epidemic, the clothing and textile industry of the terminal has been greatly impacted, especially from 2 to April. In April 2020, the total retail sales of textile and apparel reached 79 billion 900 million yuan, down 18.5% compared with the same period last year. From 1 to April, the total retail sales of textiles and clothing were 305 billion 700 million yuan, down 29% from the same period last year. Affected by the epidemic, retail sales of clothing, footwear and cap industry are increasing at a low rate.

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Although terminal consumption data is poor, polyester start-up is better than market expectations. Since the beginning of this year, the new production capacity of polyester factories has been put into operation. The new capacity currently under way is roughly 2 million 250 thousand tons, and domestic polyester production capacity exceeds 60 million 70 thousand tons. In June, nearly 1 million 300 thousand tons of new equipment is expected to be put into operation.

Due to the low price of the former downstream weaving factories, the speculative reserve is being carried out. The current stock level of polyester factories is not high, and the cash flow level of staple fiber and flask can be maintained at a relatively high level. Against this background, the start-up of polyester factories is encouraging. It has been raised to more than 90%, and the consumption of PTA is also at a higher level.

On the whole, there is a possibility of a gradual improvement in the fundamentals of PTA from 6 to July, and the pressure of inventory is expected to ease. In the case of limited cost space, PTA prices still have the upward momentum of gravity.