2020 PX Semi Annual Report: Supply Pressure Greater Than The Second Half Of The Market How To Deduce

In the first half of the year, public health incidents led to a sharp fall in oil prices, and PX fell to a low level. After May, PXN continued to decline, the vast majority of enterprises were losing money, and enterprises were downloaded and shut down more widely. The performance of peripherals was particularly obvious. Long Zhong believes that the new capacity of PTA will increase in the second half of this year. With the arrival of gold and silver ten, demand will be strengthened. PXN will gradually increase, cost will rise, and PX price is expected to be repaired.

First, the lack of demand, the cost is bad, the PX price falls to the historical low.

Figure 1 PX price trend

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In the first half of the year, PX prices showed a V trend. In 1-4 months, prices fell rapidly, and prices rebounded in May.

1) at the end of January 2020, public health events broke out in China, overlaying the PTA enterprises in the lower reaches of the Spring Festival, and slowing the demand for PX. However, at the end of December 2019 and the end of January 2020, the 4 million tons of PX installations in Zhejiang petrochemical plant were put into operation respectively, and the supply of PX increased. Meanwhile, the price war between Russia and Saudi Arabia at the end of February led to a sharp drop in oil prices, a fall in costs and an increase in supply, but the demand shrank, resulting in 1-4. The price of PX continued to decrease in April 22nd, and fell to the lowest point of 432.5 US dollars / ton CFR in April 22nd, down by 535.65 US dollars / ton, or 53.33%, for the past 06 years.

2) in May, the oil industry reached an agreement on the reduction of production, and at the same time, the overseas lifting of the ban, the rise in oil prices and the superposition of domestic prices began to encourage the resumption of production and production in March. The price of PX began to rise in May. As of June 30th, the price of PX closed at $535 / ton CFR, down 303 US dollars / ton, or 37.5%, compared with the same period last year.

Two, Zhejiang Petrochemical put PX into the market and add tiger.

Fig. 2 Yield of PX

In 2019, China increased 8 million 330 thousand tons of PX production capacity, increased 2 million tons in 2020, and the output increased considerably compared with the previous year. In March 2020, due to higher profits, the enterprises' production intention was strong, and the PX output increased at the highest level in the first half year. However, with the decrease of profits, the PX production decreased. According to statistics, the total output of PX in the first half of 2020 was 10 million 30 thousand tons, an increase of 3 million 350 thousand tons compared with the same period, an increase of 50.15%.

Three, domestic capacity explosion PX imports continue to decline

Figure 3 PX import volume

Affected by domestic blowout growth, we can see from the chart that PX import volume dropped sharply in 2020, and reached a low level in the first half of May. Long Zhong information statistics, PX imports in 2020 1-5 tons, 5 million 750 thousand tons, down 1 million 170 thousand tons, down 16.91%.

Four. Public health events affect PTA production in March.

Fig. 4 Yield of PTA

Public health events have great impact on the domestic demand and export of China's textile and clothing, which restricts the demand of PTA. From the chart, we can see that the domestic PTA output has decreased by 129 thousand and 600 tons in March, a decrease of 3%. In the 1-6 months of 2020, the total output of PTA was 23 million 615 thousand and 200 tons, up 1 million 700 thousand tons, or 7.8%.

Five, demand recovery superimposed costs support the second half of the PX price is expected to be strong.

Good: 1, 6-7 months for polyester traditional off-season, starting in August, polyester demand will gradually recover, with the advent of golden nine silver ten, polyester demand will continue to rise, PTA demand increases, while in Hengli 5 Line 2 million 500 thousand tons and new Feng Ming 2 million 400 thousand tons of new installations put into operation, the second half of the year PX needs to increase significantly.

2, the major producers of crude oil have reduced production greatly. Although the demand for crude oil has been reduced by public health incidents, with the continuous recovery of industries, it is expected that crude oil will go out of storage in the 3 quarter, and oil prices will rise at the cost side.

3, supply and demand calculation shows that in the second half of the year, PX added a total of 1 million 800 thousand tons of capacity, and PTA added 7 million 400 thousand tons of capacity.

Bad: 1, public health incidents in some countries abroad are still serious, inhibiting crude oil gains.

2, the overall external demand is weak, and businessmen are still pessimistic about the ten orders of foreign clothing orders.

3, the polyester stocks of weaving enterprises and traders are on the high side, and the stock of polyester enterprises continues to increase, or will become the next point of contradiction.

Price forecast: Cost driven, polyester is expected to gradually recover after July. It is expected that the price of PX will rise in the second half of the year. The price of PX will be raised to $650 / tonne CFR level in 11-12.

Commencement forecast: Start up, slow recovery support, Zhenhai Refining and chemical industry has started, is expected to start in the second half of the PX is expected to run in the 85% line.

Profit forecast: PXN is currently at a low level. With the slow increase in demand and outage of peripherals, it is expected that PXN will continue to be repaired as follows:

Table 1 PXN forecast for the second half year

Unit: USD / T