The market is 'clouded', and PTA's weakness is difficult to change

Recently, the maintenance of PTA devices has been very few, and the new production capacity put into production in the early stage is gradually supplied to the market. In the first quarter of next year, Hong Kong, Baihong and other new production capacity will be released, and PTA supply will reach a new level. It is difficult for polyester demand to have outstanding performance around the Spring Festival next year, and the contradiction between PTA supply and demand may intensify in the future, and the weak market situation will continue.

Supply pressure is prominent

In 2019, Xinjiang Zhongtai, Hengli Petrochemical, Xinfengming and other new devices were released one after another, and PTA supply pressure increased again. However, the decline in crude oil prices reduced market costs, and PTA's overall profit performance was good. During the year, PTA's average spot processing fee was still at a high level of 626 CNY/ton, and manufacturers were basically in a profitable situation. Although the spot processing fee has fallen since the fourth quarter, for devices with upstream and downstream supporting facilities, manufacturers are still profitable under the current processing fee of about RMB 500/ton.

In the first quarter of next year, the market is also expected to put into operation new production capacity such as Honggang Petrochemical and Fujian Baihong. The development of refining and chemical integration will intensify the competition in the PTA industry, and the later reduction of processing fees will be a high probability event. In order to earn more profits, many devices have been postponing maintenance plans since the second quarter. Judging from the equipment expected to be overhauled in December, Hainan Yisheng, Fuhaichuang and Zhuhai BP were mainly overhauled at the end of last year. Fuhaichuang and Zhuhai BP’s last maintenance time was in the first quarter of this year. Under the background of Fei Shangke, manufacturers are more willing to increase their production capacity, and the probability of centralized overhaul in December is unlikely. At present, PTA's operating load is at a relatively high level near 92%. Xinfengming's new production capacity has already produced products normally. Superimposed on the expectation of new capacity to continue to increase in the later period, supply pressure will restrict PTA prices.

Demand is difficult to increase

With the resumption of domestic production and operation activities in the second quarter, new domestic polyester production capacity has begun to expand steadily. So far, 5.44 million tons have been put into production, with a capacity growth rate of 9.2%, and 250,000 tons of new equipment is expected to be released before the end of the year. At the beginning of the year, due to the delay in resumption of work caused by the epidemic, the cumulative monthly output of polyester in the first half of the year was lower than that of the same period last year. Although the base of polyester production capacity has increased since the second half of the year, and the operating load has remained high at around 87%, it is still difficult to make up for the previous loss, and the output growth rate is still slow .

After the National Day and Mid-Autumn Festival, under the stimulus of "Double Eleven" orders and the expectation of the cold winter this year, the demand for polyester has risen in stages. In October, the production of polyester hit a high of 4.8 million tons, and the inventory of various polyester products showed different degrees of decline. , Especially staple fiber manufacturers have a negative inventory situation. However, after the holiday effect gradually receded, the willingness of downstream purchases to diminish, and the cash flow of polyester filaments was once again compressed. Among them, POY and FDY of filaments have entered a loss.

Since weaving companies generally have holidays one month before the Spring Festival, and rework after the festival, it is difficult to avoid the accumulation of polyester factories around the Spring Festival next year. The outbreak of the epidemic this year has severely affected the sales of spring orders at the beginning of this year, which will restrict the production of spring clothing next year. In the absence of more stimulus effects in the future, it is difficult to reproduce the peak demand in the market outlook.

In short, in the future, PTA supply pressure will overwhelm the market, and it will be difficult for the polyester start-up load to reach a new high near the end of the year. The probability of PTA continuing to accumulate in the later period is high, and the weak market pattern will not change.