Poor terminal demand, limited PTA rebound

At present, the overall consumer confidence in the domestic terminal market is sluggish, and consumption capacity is always limited. However, some large foreign manufacturers have parked for holidays, and the market is in a state of confusion. Although the overall operating rate of the domestic polyester market is slightly better than the previous period, the overall destocking capacity is limited due to the lack of better consumption in the terminal. The upstream cost is still weak to the support of PTA, the probability of a sustained high rise is relatively low, and the low level rebounds mainly, and the amplitude may be limited.

PTA market trend review

In April, PTA stepped out of the situation of rising first and then restraining. The rise in the first half of the month was mainly driven by a sharp rebound in crude oil and polyolefins, as well as a slight rebound in prices caused by manufacturers' high processing fees. Crude oil fell sharply afterwards, the hype of polyolefins cooled down, polyesters returned to rationality, prices fell all the way, and hit a record low since history. Before May 1st, the downstream market was mainly stock-based. At the end of the month, the market rebounded slightly, but the range was not good.

Limited cost support

Due to the large fluctuations in the crude oil market in April, PX prices maintained a wide range of shocks, even hitting a record low. As of April 27, the Asian PX market closed at US $ 453 / ton CFR China and US $ 433 / ton FOB South Korea, down 3.82 and 4 percentage points from the end of last month. The lowest values in the month were US $ 433 / ton and US $ 413 / ton, and reached a record low. The ACP negotiations failed in May, and the final negotiation range was 410-470 (USD / ton CFR Asia), which was very different from the quotation of more than 600 USD / ton, which was the cause of the final abortion.

According to the current PX external purchase price of USD 453 / ton, and the processing fee of 500 CNY/ton, the PTA tax-paying cost is about 2920 CNY/ton, down 10.15 percentage points from the cost line at the end of last month. So in terms of cost, the support for PTA is relatively limited.

TA equipment and inventory remain high

The average monthly processing fee of PTA in April remained at 710 CNY/ton, up 22.41 percentage points from the previous month ’s average of 580 CNY/ton. This is why the operating rate of the device keeps rising when the price is low. As of the end of April, the PTA operating rate reached 91.41%, an increase of 10.16 percentage points from 81.25% at the end of the previous month, and the number of days of PTA storage remained at 7.5 days, an increase of 15.38% from the end of the previous month.

Is mainly due to the restart of the operating rates of the following major manufacturers' devices. The details are as follows: in mid-April, Xinjiang Zhongtai Kunyu 1.2 million tons / year device was upgraded to 80%; Fuhai Chuang 4.5 million tons / year device has been restarted to 90%; Yisheng Ningbo 2 million tons / year PTA device and Yadong Petrochemical The 750,000 tons / year device has been restarted. At present, the domestic PTA social inventory is about 2.8 million tons, which is still on the high side. Oversupply of PTA has become the industry consensus.

And the decline in imports also shows that the overall market demand is temporarily unsatisfactory. According to statistics, in March 2020, China's PTA import volume was 24,600 tons, the cumulative import volume was 135,100 tons, the import volume fell by 77.69%, the import volume fell by 59.34%, and the cumulative import volume fell by 19.42% compared with the same period last year. In March 2020, China ’s PTA ’s monthly export volume was 105,700 tons, the cumulative export volume was 185,200 tons, the export volume rose by 32.87%, the export volume increased by 91.06% year-on-year, and the cumulative export volume fell by 1.96% compared with the same period last year.

The overall recovery of the terminal market is slow

Due to the impact of the epidemic, European and American countries have successively "closed the country and closed the city", the export transportation chain has almost been interrupted, and the demand has shrunk significantly. Under the heavy blow of the European and American tidebacks, China's textile and apparel factories are all "helping themselves". However, the current domestic consumer confidence is generally sluggish and consumption capacity is always limited.

On April 22, the China Garment Association, the China Home Textile Industry Association, and the China Council for the Promotion of International Trade in Textiles signed a "Joint Statement of the New Crown Epidemic Industry" together with dozens of other industry organizations around the world. Supply chain partners have called for solutions to the industry ’s economic difficulties. The statement called for including G20 member countries and non-G20 member countries to take positive actions to help and support the textile industry.

A week before the festival, I heard that many large traders on the market received orders for 210T polyester taffaffs with a total of 130 million meters. For a time, the polyester taffeta on the market was sold out, and many weaving manufacturers robbed polyester taffeta's raw polyester yarn! Driven by this news, PTA and ethylene glycol came out of a wave of rebounds during May 1 stocking. However, polyester taffeta is a thin polyester fabric, generally used for fabrics and linings of various clothing. The proportion of downstream consumption is small, the supply load increases rapidly, and the early inventory is sufficient, which has little effect on the actual market.

And the actual start of the terminal can also be seen, the downstream market demand for polyester is slow, and it will take some time. As of April 27, the terminal loom operating rate slightly improved to 54.54%, a decrease of 13.03 percentage points from the end of last month, 67.57%. The operating rate of the corresponding polyester also remained at a high level, and the overall inventory was significantly higher than in mid-April. According to statistics, the overall operating rate of polyester remained at 85.18%, an increase of 4.72% from the end of last month 80.46%; the operating rate of polyester filament increased by 1.53 percentage points from the previous month to 84.4%; the operating rate of polyester staple fiber fell 1.79% from the previous month to 88.05%, the decline in the operating rate of polyester chips was basically stable to 83.84% from last month.

  to sum up

Given fundamental considerations, we believe that the overall demand in the current end market is weak, and the probability of the market's short-term continuity rising sharply is relatively low, with a low rebound mainly, but the range is relatively limited.