After nearly half a month of sluggishness, PTA finally “avoided its shame” on the 29th and launched the willful rise mode! PTA futures took the lead in taking the lead. The market surged rapidly on the night of the 28th and continued the upward momentum on the 29th. As of the close of the 29th, the main 1905 contract of Zhengzhou Commodity Exchange PTA futures closed at 6504 yuan/ton, which was the same as the previous trading day. Compared with the price, it increased significantly by 154 yuan/ton, an increase of 2.43%.
As for the spot price, it also followed up on the 29th, with the internal quotation raised to around 6560-6620 yuan/ton. Judging from the previous trend, from mid-to-late February to early March, driven by the raw material PX and boosted by good news from all parties, the spot price of PTA climbed all the way to the high of the year; but then the futures fell due to the force, and the spot market ran weak. The price center of gravity is also weak and falling.
Why is PTA so high? The market even predicts that the PTA rally may surge into April, with expectations of climbing to the highest level this year!
1. Overhaul of multiple devices, PTA may face the largest overhaul in history Intensity
According to statistics, from the end of March to the beginning of April, Yisheng Petrochemical produced 3.75 million tons/year, Hengli Petrochemical produced 2.2 million tons/year, and Zhuhai BP produced 1.25 million tons/year. In 2018, Tongkun Petrochemical’s 2.2 million tons/year PTA units will be shut down for maintenance one after another. It is roughly estimated that the PTA units for maintenance from the end of March to April will lose about 310,000-330,000 tons of PTA output. If Hengli Petrochemical still If a set of 2.2 million tons/year PTA equipment is overhauled, an additional loss of PTA output of 45,000 tons/week will occur.
From the specific operating rate, the average weekly operating rate of PTA this week is concentrated at 81.6%, which is a slight decrease of 1.4% compared with last week; The real-time operating rate is 77.6%, and the real-time effective operating rate is 88.2%. In addition to the maintenance of the above-mentioned equipment, subsequent equipment such as Reignwood and Hanbang may be overhauled or production reduced; some market participants predict that PTA may face the largest overhaul in history. It is predicted that more than 15 million tons of production capacity will be overhauled, and domestic PTA output will drop sharply in stages. This will inevitably lead to tight supply in the market.
2. Polyester production is running at a high level, and PTA may enter a phased destocking state
As the traditional peak season for textiles, polyester manufacturers performed better in destocking in March, and the operating rate of polyester manufacturers remained high; according to statistics, the current average load of polyester is concentrated around 90.0% , the overall startup of the downstream weaving market is also around 80-90%. Since the fourth quarter of last year, new production capacity has been launched in the central and western regions. The output of the new production capacity has exceeded the capacity eliminated in the previous two years, which has increased the demand for the polyester market. Coupled with the stimulation of the traditional peak season, the operating rate of the polyester market is expected to remain unchanged in April. Operating at a high level to meet the rigid demand of the weaving market, there may still be room for a slight increase in the market outlook.
According to statistics, domestic PTA social inventory at the end of March was about 1.25-1.3 million tons, based on the current operating rate of polyester equipment According to calculations, the PTA market has begun to destock. With the continuous maintenance of PTA equipment in the market at the end of March and the beginning of April, and with the domestic polyester production load operating at a high level, the demand for PTA is bound to be stable or increase, so PTA will surely enter a phased destocking phase. Some professionals predict that the theoretical destocking of PTA in April can reach about 120,000 tons; if Hengli’s 2.2 million tons/year PTA device is overhauled in April, the PTA destocking effect will be even better.
3. Crude oil is running strongly, and PX may recover after all its shortcomings
Since the beginning of this year, as the supply side support brought by OPEC+ oil-producing countries’ progress in reducing production has been pushing up oil prices, the market’s bullish sentiment is still high, and the release of production reduction signals has been a good news, and international oil prices once refreshed A new high since November last year. International oil prices have also continued to fluctuate at high levels in recent times. As of March 28, New York crude oil May futures settled at 59.30 yuan/barrel; Brent crude oil June futures settled at 67.10 U.S. dollars/barrel. Industry insiders said that budgetary needs have forced Saudi Arabia to push oil prices to at least US$70 per barrel this year; although there are also rumors of bad news that have limited the increase in crude oil, the pattern of international oil prices that is easy to rise but difficult to fall in the short term has been formed.
In addition to the support provided by international oil prices, although the price of the upstream raw material PX fell sharply in the early stage, which exerted a drag on the PTA market; however, as the bad news has been exhausted, the market expects that there will be little room for subsequent downward adjustments of PX, or there may be a certain rebound, which will naturally have a negative impact on the PTA market. Bring benefits�
As many sets of devices in the PTA market enter maintenance status, As downstream polyester production starts to run at a high rate, demand may increase further, and the tight supply situation may continue. Coupled with the favorable release of upstream cost, it will drive the PTA futures bulls. In addition, at the time of tax rate adjustment and other time points, PTA spot may follow the good news.
At the end, it is worth mentioning that the current cash flow situation of PTA manufacturers is improving, and their profitability has been greatly improved. According to calculations from China Silk City Network, as of the 29th, PTA’s cash flow has risen sharply to 654 yuan/ton; it is the highest profit margin this year.
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