PTA Declining Trend Has Not Yet Been Reversed

In the 2 quarter, with the news of oil production reduction, the PTA situation has improved. The main contract of PTA futures has risen 300 yuan / ton from the bottom. However, with the reduction of production and good cash, attention will once again return to PTA's own supply and demand side. At present, the overseas epidemic is still grim, and terminal demand has not improved. PTA's weak situation is hard to reverse.

Oil production is reducing market sentiment

Recently, the OPEC+ joint production reduction agreement has guided the mood to improve. When the international oil price has been cashed, it once again fell into the worry of the sharp decline of the demand due to the new crown pneumonia epidemic. The US oil fell back to around $20 / barrel again. However, after reaching an unprecedented yield reduction agreement, the relationship between supply and demand of crude oil has improved, and the probability that oil prices will continue to decline sharply in the future is relatively small.

Although some Asian PX installations have been overhauled in recent years, the overall supply has decreased, but overall, the domestic PX production increased by 57% last year. Since then, the 2 phase of the Zhejiang Petrochemical Company has been put into operation. In the middle of the year, there are also 1 million tons / year installations of the Fuhai PX plant in Dongying, Shandong, and the PX supply is free from worry. At present, PTA raw material cost is more than 2500 yuan per ton, forming a certain support for the market.

Increased processing fees to enhance PTA production willingness

Due to the mismatch of the upstream and downstream industrial chain after the Spring Festival, PTA social inventory quickly accumulated to more than 3 million tons. Although mid March, Hengli, fuhaichuang, new Feng Ming and other large sets of equipment have been overhauled and phased to reduce market supply, it is difficult to alleviate the huge inventory pressure.

Since April, the PTA spot processing fee has been showing brightest. Now it has climbed to a higher level near 800 yuan / ton, up nearly 200 yuan / ton compared with the end of March, and the processing fee of the disc has climbed to nearly 1000 yuan / ton.

Under the background of high profits, manufacturers' willingness to overhaul is weakened. Recently, with the gradual restarting of these maintenance devices, the load of PTA industry has increased to 93%, far higher than the actual demand load of PTA corresponding to the current polyester operating rate. It is expected that the contradiction between supply and demand of PTA will continue to increase, and the industry inventory will also rise again.

Overseas epidemic spreads drag on terminal demand

Since March, the overseas epidemic has been spreading. The textile enterprises that have just returned to work face the double blow of domestic demand being unstable and the shrinking of external demand. Statistics show that in 2020 1-3, the total export volume of textiles and clothing decreased by 17.70% compared to the same period last year. The terminal weaving enterprises with missing orders will have to stop production and leave. Recently, Jiangsu and Zhejiang weaving enterprises started to maintain a low level near 55%, which was 14 percentage points lower than the peak after the year, which is down nearly 30 percentage points from last year.

Despite the reduction of oil production by Dongfeng, after the Qingming polyester came out of a wave of rebound, polyester stocks fell by more than 1/2 from the end of March, but faced with the weak downstream demand, it is worth studying whether these stocks can be effectively digested. At present, the overseas epidemic is still not optimistic, and it is difficult to alleviate in the short term. The domestic terminal textile enterprises under the background of external demand setbacks, the pressure of domestic sales is obviously aggravated, and the poor demand will be a drag on the whole industrial chain.

In short, the cost side of PTA is unlikely to fall again, but the shrinking of terminal demand is difficult to recover in the short term. At the same time, the PTA factory's willingness to overhaul under the condition of high profit is weakened, and the contradiction between supply and demand in the later stage is aggravating again, and the market may fall again.