2020 PTA Semi Annual Report: Hard And Dangerous, Staged Magic Market

Time flies. The extraordinary 2020 is over half. In half a year, it has witnessed too much history. Public health events spread all over the world, stocks broke for the four time, international oil prices fell to negative values, PTA accumulated nearly million tons in one month, and social inventories went up to a new high. The price dropped to a new low. The PTA market took advantage of wind and waves in the "three high" environment. The performance of high inventories, high opening jobs and high processing fees has brightened the eyes of the industry. With the rebound of global economic index and the revival of demand, the prospects are bright. But opportunities are often accompanied by challenges. PTA is facing new production in the second half of the year. Will the supply of magic market be repeated?

Figure 12019-2020 PTA in the first half of 2014 Price comparison map

Source: lung Chung

The first quarter of the bad round surround, the word runs through to the end.

Public health incidents triggered panic in the market in 2020. According to convention, the downstream enterprises are basically in a state of parking and falling down during the Spring Festival, which will gradually resume production after the first month of fifteen, and the demand for PTA will be greatly improved. But in the year of the year of the mouse, because the severity of public health events is far beyond the expectation of people, and the scope is extended to the whole world, the demand for downstream factories has been slow to recover, and the strain of logistics has been almost interrupted in some areas, resulting in a post demand. In the middle and later part of the first quarter, some enterprises responded to the government's call and produced as much as possible, resulting in a significant increase in inventory pressure. In addition, human resources in terms of prudence, production, logistics and sales were also more intense than before, which added a lot of variables to the recovery that should have occurred. In addition, the price war between Saudi Arabia and Russia has stirred up waves again. At the beginning of March, Russia and OPEC failed to reach agreement on the new reduction plan. The "boat of friendship" says that the international crude oil price has plummeted and the domestic chemical products are all bursts. The PTA market is hard to escape "Curse" and the price has been repeatedly bottomed out.

Double support in the two quarter, prices slightly strengthened

The two quarter PTA cost side is still the dominant factor. Demand for overseas epidemic in the early part of the season is increasing, and supply is becoming more and more surplus, resulting in insufficient storage capacity of crude oil. WTI Futures sell wildly to negative values. PTA Prices have dropped to a record low. Two thousand nine hundred and sixty element / Tons. Subsequently, the crude oil was repaired. PTA Price has opened up a way of concussion. In particular, the main oil producing countries voluntarily join the reduction in production, and the rapid rise of crude oil prices has led to the rapid rise of crude oil prices. PTA Prices are strong. On the other hand, Ningbo and Jiangyin Hon bond line devices unexpectedly stopped, resulting in a slight tightening of spot liquidity and a small buyback in mainstream factories. PTA Spot, supporting prices remain strong. Therefore, under the double support of cost and fundamentals, PTA Prices are narrowing.

Overall, the first half of the year PTA When the market takes the lead in the cost side, it can be described as "Cheng Xiao He also defeated Xiao He". Although the price once touched the bottom, the cost down was once given. PTA Factories allow profits. According to long Zhong information statistics, Two thousand and twenty First half of the year PTA Market average price Three thousand eight hundred and thirty-one element / Tons, down from the same period last year Thirty-nine point two two A percentage point. The average processing fee is Six hundred and thirty-nine element / Tons, down from the same period last year Forty-five point seven one A percentage point.

Cost dominates

Figure 2 Crude oil price chart

Source: lung Chung

2020 in the first half of the year, the factors affecting the cost of PTA crude oil volatility is a must. The outbreak of public health events can be said to be the trigger and trigger some butterfly effects. Especially this year, the price of crude oil has dropped considerably, and the price has dropped to a negative value. This is called "the operation of God". After a trough, the main oil producing countries will reduce production agreements and Saudi Arabia will unilaterally reduce production by 1 million barrels per day in June. Saudi Arabia's aim is to encourage OPEC and other oil producing countries to abide by their commitments to reduce production. Saudi Arabia aims to provide additional voluntary production targets to support the stability of the global oil market. At the same time, due to the impact of the epidemic, the economic pressures of all countries are unprecedented. Therefore, under the pressure of the economy, all countries are preparing for the resumption of work, and the demand side is also gradually recovering. The industry is optimistic about this, and the crude oil has begun to rebound.

Figure 3 Naphtha cracking spreads

Source: lung Chung

Naphtha cracking spreads are equally inconceivable. The rapid outbreak of public health incidents, the greatly discounted terminal consumption level, also reduced the consumption of refined oil, and the pace of demand progress was hindered. The inventory pressure of finished oil gradually appeared, which inhibited the demand of naphtha to a certain extent, resulting in obvious increase in the volume of naphtha inventories. With the increase in naphtha inventories and the weakening of crude oil transmission, naphtha prices began to fall, and the final split price difference appeared negative. The lowest value appeared in April 8th, and the split price difference reached -58.06 US dollars / ton.

Naphtha splitting spreads after experiencing negative values. After the relaxation of the contradiction between supply and demand, and the rebound of crude oil cost side, the naphtha has formed favorable support. There has been a quick fix. As of June 30th, naphtha cracking price difference was $78.44 / ton. In the first half of the year, naphtha cracking spreads averaged 47.17 US dollars / ton, up 3.06 percentage points from 45.77 US dollars / ton in the same period last year.

Fig. 4 PX- Poor naphtha processing

Source: lung Chung

The average price spread of PX-N in the first half of 2020 was $245.04 / ton, down 46.60% from the same period last year. On the one hand, it comes from the drag on the bottom of cost, and on the other hand is the contradiction between supply and demand of PX itself. The low price of crude oil and naphtha will directly affect the sharp decline in the price of PX. At the same time, the domestic PX will smoothly put into operation 9 million 440 thousand tons of equipment in 2019, which will greatly increase the supply of the PX market in 20 years. In 2020, there are still 3 million 800 thousand tons of equipment to be put into operation. At the beginning of the year, 2 million tons of Zhejiang petrochemical company has been put into operation, and the 800 thousand tons of Sinochem Quanzhou and 1 million tons of chemical equipment of the company are all planned. Put into production in the three quarter.

Because most of the maintenance of PX devices was concentrated in the three quarter, the operation of PX devices in the first half of the year was relatively stable, although the PTA load was also high. Supply and demand side view, PX supply and demand situation is still showing a relaxed state. Therefore, under the double cost of cost and supply and demand, the PX spreads are slightly weaker. Especially after the end of June, PX-N processing fell to a record low of 146 US dollars / ton.

Figure 52019-2020 Year PTA Processing fee chart

Source: lung Chung

In the first half of 2020, the average PTA processing fee was 640.21 yuan / ton, down 45.61% from the same period last year. In the year when the new capacity was put into operation, the processing cost of 600 yuan / ton was not easy, and the sharp decline of crude oil prices was mainly affected by the epidemic. Although the PTA side is down, the voice of the industry chain is still concentrated in the hands of PTA large enterprises. At the same time, the new PTA devices are mostly concentrated in the second half of the year. In addition, with the maturity of the futures tools, the PTA processing fees have not bottomed out, and remain relatively optimistic.

Supply side:

Figure 6 2019- Two thousand and twenty year PTA yield Trend chart

Source: lung Chung

from Two thousand and nineteen Starting in the second half of the year PTA Opened another round of peak production period, under the background of increased supply. PTA Profits and processing costs run counter to market conditions. Two thousand and twenty First half of the year PTA Capacity base adjusted to Five thousand four hundred and eighty-nine Ten thousand tons, Two thousand and twenty First half of the year PTA New devices are available. Two thousand and twenty year One Xinjiang, China and Thailand One hundred and twenty Ten thousand tonnes, Two thousand and twenty year Two Hengli Petrochemical Company 4#250 Million tons and Two thousand and twenty year Six Constant force at the end of month 5#250 The 10000 ton production line was delivered and qualified products; the first half of the year. PTA New capacity Six hundred and twenty Ten thousand tons. Compared with last year's year-on-year capacity increase Four hundred and sixty Ten thousand tons. In fact, the main self Two thousand and twenty year One From January onwards, long term parking will be stopped. Two More than 5 years of equipment eliminated existing ones. Five thousand two hundred and forty-nine Effective capacity of 10000 tonnes, estimated One Effective production capacity will be in the month. Four thousand eight hundred and sixty-nine Ten thousand tons. (excluding long term parking capacity: Fuhai create One hundred and sixty-five 000 tons, Hua Bin Petrochemical three production separately Sixty Million tons, Yangzi Petrochemical Thirty-five Ten thousand tons. Total Three hundred and eighty Ten thousand tons. Two thousand and twenty First half of the year PTA Yield is Two thousand three hundred and forty point six Ten thousand tons, Two thousand and nineteen year PTA Yield in Two thousand one hundred and seventy-five point four two 10000 tons, an increase from last year One hundred and sixty-five point one eight Million tons, an increase 7.06% 。

Figure 72019-2020 PTA operating rate

Source: lung Chung

Two thousand and twenty First half of the year PTA Average start up 84.98% , Two thousand and nineteen year PTA Average operating rate 83.35% Year-on-year increase 1.63% 。 In the early spring festival, PTA Construction load has been at a high level. After the Spring Festival, due to the serious situation of domestic epidemic prevention and control, PTA Factory maintenance in three or four months intensified, the first half of the load started to a minimum. 69.03% 。 However, with the improvement of domestic epidemic prevention and control situation, the downstream demand has been gradually restarted and driven by high processing fees. PTA Construction load is maintained at a relatively high level.

Figure 82019-2020 PTA social inventory comparison map

Source: lung Chung

Two thousand and twenty First half of the year PTA Average social inventory is as high as Three hundred and thirteen point one one Ten thousand tons. Two thousand and nineteen year PTA Average social inventory One hundred and twenty point five five 10000 tons, an increase from last year One hundred and ninety-two point five six Million tons, an increase 61.50% 。 PTA In the first half of the year, social inventories continued to hit. Three hundred A record high of more than 10000 tons.

Figure 92018-2020 PTA loss comparison map

Source: lung Chung

Two thousand and twenty First half of the year PTA Overhaul loss Three hundred and thirteen point one one Ten thousand tons, Two thousand and nineteen year PTA Overhaul loss Four hundred and twenty-six point zero six 10000 tons, down compared with the same period last year One hundred and twelve point nine five 10000 tons, or decrease 36.07% 。 In the first half of the year, driven by the high processing profit, PTA The production enterprises have increased production at full capacity, and the enterprises that should be overhauled have been postponed.

Demand side:

Table 22020 Statistics of domestic polyester industry's new capacity in the first half of 2006

Unit: 10000 tons / year

Source: lung Chung

According to long Zhong information statistics, in the first half of 2020, the domestic polyester industry added 13 sets of equipment, total production capacity of 3 million 80 thousand tons / year (including polyester filament 1 million 150 thousand tons / year, polyester staple fiber 250 thousand tons / year, PET bottle piece 1 million 450 thousand tons / year and polyester chip 230 thousand tons / year), as of the end of June, the domestic polyester industry productivity base has risen to 62 million 70 thousand tons / year.

From the point of view of output, 1-6 months, the domestic polyester industry output showed a trend of first fall and then up. In February, when the domestic epidemic spread gradually, polyester factories expanded production and maintenance scale, and postponed the restart of the pre maintenance device. However, with the normalization of epidemic prevention and control in China and the commissioning of new installations, the output of domestic polyester industry began to increase steadily and reached the highest monthly output in May. In the first half of 2020, the domestic polyester industry output was 24 million 67 thousand and 500 tons, down 7.13 percentage points from the second half of 2019, down 0.02 percentage points from the same period last year.

Import and export:

Fig. 10 2019- Two thousand and twenty year PTA Change trend of import volume

Source: lung Chung

The total import volume of PTA was 220 thousand and 900 tons in 1-5 months in 2019, and the import volume dropped by 41.14% over the first half of 2019. The decline in imports was mainly due to the increasing total PTA capacity in the first half of 2020, and the deepening of overseas public health events led to a decline in PTA imports.

Figure 112019-2020 year PTA Monthly export volume change chart

Source: lung Chung

Two thousand and twenty year 1-5 Month PTA Cumulative export volume is Thirty-three point five three Export volume ratio Two thousand and nineteen Decline in the same period 2.73% 。 The volume of exports declined slightly, mainly due to Two thousand and twenty First half of the year PTA New capacity Six hundred and twenty Million tons, new production capacity of downstream polyester Two hundred and ninety-eight Tens of thousands of tons of supply increased while demand was also increasing, coupled with the impact of the epidemic in the first half of the year. The overall export volume of the market has declined.

Forecast in the second half of the year:

Conclusion: in the second half of the year, the game between supply and demand and cost in the TA market is lacking, and the market is short of resonance, and the market is expected to be 3300-3850 yuan / ton. The supply of TA has been concentrated and production capacity has been growing at a new high. Demand side polyester has new capacity supplement, but its output is expected to be mild and weak. So the supply and demand contradiction of TA is more prominent in the second half of the year. In terms of cost, we have relatively optimistic expectations, mainly because the supply and demand of crude oil and PX are gradually improving, and prices and profits will be repaired and the cost side will be supported. When the cost is clear, the variables of valuation are mainly derived from the uncertainty of TA processing fees, specifically the game between TA's strong voice and supply and demand pressures.

Supply side:

Table 1 PTA's production expectation in the second half year

Source: lung Chung

In the second half of the year, PTA expects the new investment device with 10 million 200 thousand tons of equipment (including constant force), and its capacity growth will reach 19.46%. The 4 sets of units belong to the supporting devices of the mainstream enterprises in the industry, so the production is guaranteed, and the expected PTA output is about 1 million 950 thousand tons. The second half of the year, especially the fourth quarter, is the concentrated release period of TA capacity, which overlapped the weak terminal demand, making the contradiction between supply and demand on the upstream and downstream of the industrial chain more prominent.

Source: lung Chung

The centralized operation of the plant has made the supply and demand more contradictory in the second half of the year. From the perspective of supply easing, the production intention of manufacturing enterprises is stronger than that of the first half of the year. It is also evident from the statistics of the loss of equipment maintenance. Therefore, the expected overhaul devices in the second half of this year are much more obvious. According to information statistics, there may be 26 million 250 thousand tons of maintenance devices in the second half of this year, accounting for 47.82%.

In addition to the new investment and maintenance, we should pay attention to one aspect of the supply expectation in the second half of the year. That is, from the second half of this year, the contradiction between supply and demand in the PTA industry will lead to the rapid increase of inventory and the shrinkage of processing fees. Therefore, some of the high processing fees and low energy production devices are likely to be eliminated. This is also the main variable of the supply side of the PTA market in the second half of the year.

On the whole, we believe that the supply side of PTA will coexist in the second half of the year, and the co-exist with the high maintenance. But taking into account the growth rate of 19.46% of the new capacity, we expect the supply side as a whole to continue to rise, and the monthly output will maintain 430-450 million tons. With the commissioning of Hengli line 5, the new Feng Ming installation, and the end of the season's peak season, there may be a period of overhaul in the fourth quarter, and even some devices begin to withdraw from the market.

Demand side:

Source: lung Chung

In the second half of this year, the new PET plant reached 3 million 300 thousand tons. Taking into account the delay of some devices, it landed 200-250 tons and polyester production capacity increased by 3.62%. The theoretical output increased by 85-90 million tons, equivalent to PTA demand increased by 72.5-77 million tons, far below the supply side of about 1 million 950 thousand tons of new. Demand side growth is not as fast as supply side, and TA is accelerating.

Source: lung Chung

In terms of maintenance, there are currently few maintenance programs, but it is expected that the negative feedback of polyester will gradually be reflected in the 7-8 month as the terminal demand is weak. The polyester load will decline slightly. In the 9-10 month, the demand for orders is expected to be repaired or the load will pick up again. The trend of the fourth quarter needs more attention to the epidemic and macro impact, and the weak stability is expected.

Fig. 12 stock chart of grey fabric

Source: lung Chung

Figure 132018-2020 POY inventory comparison chart

Source: lung Chung

From the industry chain inventory situation, the second half is expected to be worse than the first half. Terminal orders are missing, grey cloth inventory is historically high; terminal raw material inventory maintains 28-30 days high; polyester equity inventory is currently neutral high; there is still expectation of continuous storage; polyester out of field inventory is about 7-8 days; PTA inventory is at a new high. The whole industry chain is in a high inventory level, and the role of the stock "reservoir" can hardly be reflected again. High inventory makes the industrial chain load lose the elasticity of buffer and become more fragile.

On the whole, in the second half of the year, the production of polyester has been extended, and the demand pull of TA has been guaranteed. However, considering the weakness of terminal demand and the high inventory status of the industrial chain, polyester load may be more sensitive during the off-season supply and demand contradiction, and the monthly output or fluctuation will increase the difficulty of determining the demand rhythm. Therefore, we must keep track of pet operation. State and expectation.

Cost:

According to the expectation of cost, we should follow the following two principles: 1, the price of any commodity is composed of two parts of cost and profit; 2, the structure of supply and demand determines the level of profit. We start from these two points to analyze the crude oil naphtha cracking price difference, PX processing difference and PTA processing cost four parts, and come to the judgement of PTA cost and price estimation expectation.

Crude oil: With the implementation of OPEC and the gradual recovery of demand side, the contradiction between supply and demand of crude oil is gradually improving. Therefore, the price of medium and long term crude oil is moving up or down. In addition, although the epidemic factors may weaken the seasonal performance of crude oil, we still think that demand side will gradually weaken at the end of September. That is to say, before the end of September, the overall volatility of crude oil was strong. The demand for the fourth quarter began to weaken, but it needed to be concerned about the supply side's changes in order to analyze its supply and demand status. So we think that the high point of crude oil is roughly around us $55-60, and the time node is at the end of September.

Naphtha and PX spreads: The difference between naphtha cracking and PX processing is the same, so we take the sum of the two as the tracking object. There is no effective direction logic in the second half of naphtha, the supply and demand changes are limited, and the profit level of related products is generally stable. On the PX side, the supply in the second half of this year is not as new as the demand side TA production capacity. The pace of supply and demand has improved significantly. Therefore, compared to the current absolute low profit level, we believe that the PX processing gap in the second half of this year will be obviously restored, which is expected to exceed US $210.

PTA processing fees: With the emergence of the contradiction between supply and demand of TA, inventory is gradually increasing. The level of processing fees in the second half of the year is gradually being squeezed. In the extreme pessimistic situation, the repair of PX processing is superimposed or seen to 350-400 yuan / ton line. But when we consider the PTA processing fee, we need to pay attention to PTA's own strong voice and the attitude of the main suppliers, so 400-450 yuan / ton is a reasonable valuation.

On the whole: In the second half of the year, there is no risk of big drop in crude oil. PX processing error will be repaired to some extent with the improvement of supply and demand. Therefore, we believe that the cost side of PTA will be slightly stronger in the second half of the year. According to the relative optimistic expectation, the cost of TA can be 3350-3400 yuan / ton. Taking into account the change in the TA processing fee, we believe that the running point of TA price is in the vicinity of 3850-3900 yuan / ton in the second half of the year, and the judgement of the low point is based on the current absolute low upstream profit, giving the processing profit of 400 yuan / ton, and the low value of TA is near 3300-3350. ( Bai Xiaodong, Sun Xuefei, Sun Xiaoye )