Increased demand boosted, PTA prices will continue to rise

Boosted by the rebound in crude oil prices and the recovery of domestic terminal demand, PTA prices have shown an upward trend since May. The author believes that the crude oil market has released a bottoming signal, coupled with its own entry into the destocking cycle, the PTA rally is expected to continue. On the supply side, equipment maintenance has increased; on the demand side, domestic textile consumption is expected to improve strongly, foreign trade orders are also expected to recover, the overall fundamentals of PTA are improving, and prices will continue to rise.

Crude oil surplus has eased

In May, the pace of economic recovery in Europe and the United States accelerated. At present, all 50 states of the United States have restarted their economic activities, and the recovery of terminal demand has driven the recovery of U.S. crude oil refineries. EIA data show that as of the week of May 15, US commercial crude oil inventories were 526.5 million barrels, down 4.982 million barrels from the previous week. At the same time, crude oil inventories in the Cushing region decreased significantly, down 5.587 million barrels from the previous month. The oversupply of the global crude oil market and the crude oil storage crisis have eased.

The latest OPEC monthly report shows that the institutional attitude is more optimistic, that the period of the worst oil crisis has passed, and that the major global economies have begun to recover, and the demand for oil is good. With the marginal improvement in supply and demand, the bottom of crude oil prices in the medium and long term will become clearer.

In addition, since the end of April, the price of PX has rebounded by US $ 57 / ton, and the cost of PTA has risen by 190 CNY/ton, which is close to the PTA spot increase. At present, the PX-Petroleum brain spread is at a low level, and in anticipation of rising oil prices, it has a certain supporting effect on PTA prices.

Accidental increase in maintenance equipment

PX prices have risen and polyester prices have also risen. The current average spot price is 8.3% higher than the end of April. At both the cost and finished product prices, PTA processing profits increased to 750 CNY/ton, up 330 CNY/ton from the low point in late February. The processing profit is good. Since April, the operating rate of the PTA device has been at a high level of more than 90%. However, recently, the accidental maintenance of PTA devices has increased.

In the evening of May 19, Hanbang Petrochemical's 2.2 million tons / year plant was shut down for maintenance, Shanghai Petrochemical's 400,000 tons / year plant, Zhejiang Liwan Polyester's 700,000 tons / year plant, Hengli's 2.5 million tons plant The / year device is also in the parking state. According to CCF statistics, as of mid-May, the domestic PTA plant maintenance capacity was 7.1 million tons / year, accounting for 13.6% of the total capacity.

In addition, starting in June, Hainan Yisheng has a capacity of 2 million tons / year and Xinjiang Zhongtai has a capacity of 1.2 million tons / year. There is also a maintenance plan, which is expected to drag down the PTA plant operating rate by 9 percentage points.

End demand gradually recovers

China's epidemic situation is strong. By mid-May, except for a few areas such as Jilin, other areas across the country are already at a low risk level. Business Superstores resumed business in an all-round way, and local governments frequently promoted consumer policies to boost the recovery of demand for terminal textiles. Overseas, the number of new crown cases in many countries in Europe and the United States has mostly entered the platform period. This month, most countries have successively lifted the blockade measures. Progressive resumption of work has brought about improvements in foreign trade orders.

Polarization of textile foreign trade orders, masks, protective clothing, etc. are driven by overseas epidemics. Export sales are good, but the scale is small; exports of conventional textile yarns and clothing foreign trade orders fell by 15% in the first quarter. Orders are expected to resume in July.

Polyester turnover improved

In anticipation of the recovery of domestic apparel and textile demand and the improvement of European and American foreign trade orders, the operation rate of Jiangsu and Zhejiang looms rebounded to 66.8% in mid-May, and the operation rate of polyester equipment recovered to 79.04%. At the same time, polyester manufacturers offered preferential promotions, and weaving and texturing manufacturers added additional raw material purchases. There was a general inventory replenishment. The polyester transaction had a small peak around May 1st, and the production and sales rate reached 175%, which helped to reduce the polyester inventory.

CCF data shows that as of May 15th, POY inventory was 16.88 days, FDY inventory was 15.44 days, and DTY inventory was 23.64 days, down 14.4 days, 12.5 days, and 9.6 days from the March high. In terms of weaving inventory, grey cloth inventory in Shengze area was 41 days, which was two days lower than the previous high.

In summary, overhaul of PTA supply-side equipment has increased, and the accumulation rate has declined; the demand side is expected to gradually recover under the expectation of improved domestic apparel and textile consumption and the recovery of foreign trade orders, and will be transmitted to the upstream of the industrial chain. Driven by favorable supply and demand, PTA prices still have room to rise.