The contradiction between supply and demand may intensify. Where will PTA go?

The progress of the epidemic recovery and the popularization of vaccines is difficult to significantly improve in the first quarter. The foundation for the short-term rise of crude oil prices is not solid. In addition, the contradiction between PTA supply and demand may intensify. Operationally, many PTA2105 contracts can leave the market at high levels.

Recently, the PTA2105 contract rose from 3328 CNY/ton in early November last year to 4094 CNY/ton. During the same period, the spot price rose from 3100 CNY/ton to 3840 CNY/ton. The strength of the PTA market is mainly driven by the cost side. For the market outlook, the author analyzes the following:

The crude oil market is weak and far strong

Reuters survey shows that in December last year, the 13 OPEC member countries produced 25.59 million barrels of crude oil per day, an increase of 280,000 barrels per day from January of that year. In addition, in December last year, the daily output of crude oil in Iraq, including the semi-autonomous region of Kurdistan, was 3.857 million barrels, an increase of 4.7% from the previous month. According to the agreement of OPEC and its production reduction alliance, Iraq’s daily output quota of crude oil in December last year was 3.804 million barrels, and the daily output quota in January this year was 3.857 million barrels. However, recently, OPEC+ reached an agreement on short-term crude oil production. Russia will increase production by 65,000 barrels per day in February and March, and Kazakhstan will increase production by 10,000 barrels per day in February and March. However, Saudi Arabia voluntarily reduced production by an additional 1 million barrels per day in February and March. Since February 1, Saudi crude oil production has fallen to 8.125 million barrels per day. Except for Saudi Arabia, Russia and Kazakhstan, OPEC + other oil producing countries maintain their oil production policy unchanged. In general, OPEC+ not only did not increase production, but instead relied on Saudi Arabia’s voluntary production cuts, which substantially increased production cuts.

The latest data shows that the average daily output of US crude oil was 11 million barrels, the same as the previous week, but 1.9 million barrels less than the same period last year. EIA predicts that because the output of existing oil wells in the shale area is declining faster than that of new drilling, U.S. crude oil production will remain at 11 million barrels per day for at least one year. In addition, Baker Hughes' data shows that as of the week of January 15, there were 287 oil wells drilled by AOL, an increase of 12 from the previous week.

As of January 19, Beijing time, a total of 95.94 million confirmed cases of new coronary pneumonia and 2.04 million deaths worldwide; 530,000 new confirmed cases and 9,349 new deaths worldwide in a single day. European countries have recently stepped up their lockdowns. The nationwide lockdown in the United Kingdom lasted at least until mid-February. This lockdown requires people to work and study at home, prohibit leaving the area, and only go shopping for basic needs. In addition, the blockade of Germany, Europe's largest economy, lasted at least until January 31, and the blockade of the Netherlands lasted at least until February 9. Data show that under strict lockdown measures, the road utilization rate in the UK, France, Italy and Spain was the lowest level since June last year, down 37% compared to before the epidemic. OPEC said in its January monthly crude oil market report that restrictions and blockade measures had a negative impact on European oil demand at the end of last year and continued to put pressure on consumption in the first quarter of this year. In addition, from the perspective of vaccination, only Israel has a vaccination rate of 15% of the total population, and other countries have a low vaccination rate. It can be said that the demand in the first quarter was more pessimistic than the previous market expectations.

Although Russia and other countries still have a thirst for market share, OPEC adopts a demand-based production restriction strategy, which provides support for the market. Considering that the progress of the epidemic and vaccine popularization is difficult to improve in the first quarter, the market start time and the actual improvement time are mismatched. If the long-term low position bet that the epidemic will pass, you can continue to hold it. The staged market should beware of the inconsistency between expectations and facts.

Device overhaul supports the widening of the price gap between PX and naphtha

　As of January 15, the central spot price of PX's CFR Taiwan, China was US$691/ton, and the average price of the week was US$690.5/ton, an increase of US$11.9/ton from the previous week. In addition, as of the week of January 8, the domestic PX device operating rate was 76.6%, and the Asian PX device operating rate was 76.7%. Among them, Jinling Petrochemical’s 700,000 tons/year facility dropped to 70% on January 15; Ningbo Zhongjin’s 1.6 million tons/year facility began maintenance on November 26 last year for two months. It is planned for January this year. Restart on the 26th; Fuhua’s 800,000-ton/year plant was overhauled from December 18 last year to January 25th this year; Pengzhou Petrochemical’s 750,000-ton/year plant restarted on January 10; Urumqi’s production capacity was 1.07 million tons/year The annual load of the plant was raised to 70%; the load of Qingdao Lidong’s plant was raised to 90%; the plant with a capacity of 800,000 tons/year in Quanzhou of Sinochem was put into operation on December 28 last year, and the load will be gradually increased in the later period. In addition, Idemitsu’s 270,000-ton/year facility shut down in late December last year; JX Oita’s 420,000-tonne/year facility has no restart plan; New Japan Petroleum Chita’s 400,000-tonne/year facility plans to shut down in October ; Singapore’s ExxonMobil plant with a capacity of 450,000 tons/year was shut down in early June last year, and there is no clear resumption time; the Middle East PetroRabigh’s unit with a capacity of 1.34 million tons/year is scheduled to be overhauled in February.

Due to the maintenance of CICC and other installations, the magnitude of the maintenance of domestic PX installations cannot be ignored, so that a total of 350,000 tons of PX markets were destocked from November to December last year. As a liquid chemical product, PX is particularly sensitive to changes in inventory. Supported by this, the price gap between PX and naphtha widened to $180/ton. In the second quarter of this year, the magnitude of the overhaul is even greater. It is expected that the PX market will continue to destock before the Zhejiang Petrochemical Phase II PX plant is put into production, which is bound to support the further widening of the PX and naphtha price gap.

PTA overall inventory is still at a high level

Jialong Petrochemical, Tianjin Petrochemical, Pengwei Petrochemical, Hanbang Petrochemical 1#, Yangzi Petrochemical's PTA devices are in a long-term shutdown state, and they will be eliminated by the market in the future. Dalian Yisheng’s 2.25 million ton/year plant is running at half-negative capacity and is expected to resume production in the near future; Sichuan Shengda’s 1 million ton/year plant is scheduled to restart on February 20; Fuhai Chuang’s 4.5 million ton/year plant is planned Restarted on January 22; Hanbang Petrochemical's 2# plant with a capacity of 2.2 million tons/year was shut down for maintenance on January 6, and the restart time is to be determined; the plant with a capacity of 2 million tons/year in Yisheng Hainan was originally scheduled to be overhauled in January but is now postponed Until March. In terms of new production capacity, Fujian Baihong's 2.5 million tons/year plant, which was originally planned to be put into operation last year, has been postponed to January or even February this year.

The operating rate of domestic PTA devices is 81.20% recently. With the resumption of overhaul devices and the gradual commissioning of new devices in the later period, the supply pressure on the PTA market is still relatively high.

This week, PTA futures warehouse receipt inventory continued to rise, while PTA social inventory fell slightly. As of January 15, the inventory of PTA futures warehouse receipts was 1.8126 million tons, an increase of 62,800 tons from January 8 and an increase of 1.6446 million tons from the same period last year; PTA social inventory was 3.89 million tons, a decrease of 35,000 from January 8. Tons, an increase of 2.336 million tons over the same period last year. Overall, the PTA market inventory is still at a high level.

The seasonal decline of polyester plants is clear

At present, all indicators of the polyester link are performing well. Except for FDY, the inventory and cash flow of other varieties of polyester filament have returned to the normal levels of previous years, and the POY inventory index is 6.6 days. The current market pays more attention to the maintenance of polyester plant equipment and the holiday of workers in the terminal textile and garment industry. It is understood that most of the workers return to their hometowns in mid to late January. Judging from the announced maintenance plan for polyester plants, most filament and Jiangsu and Zhejiang staple fiber plants plan to start maintenance in mid-to-late January. Therefore, the seasonal decline of the polyester end is clear. If Baihong's new plant with a capacity of 2.5 million tons/year starts up as scheduled, the risk of accumulation in the PTA market will further increase.

At present, the operating rate of looms in Jiangsu and Zhejiang is 79%, a slight decline from the previous period, but orders have not shown signs of continuous improvement, and grey fabric inventories are still at a high level. From January to November last year, the cumulative growth rate of clothing and clothing accessories exports was -7.2%, and the growth rate of clothing retail was -9.4%. The absolute figure of clothing consumption was relatively low.

Trading straregy

The positive factor for the recent increase in PTA prices is the rise in crude oil prices. If the crude oil market is betting that the epidemic will pass and demand will be released, it can do more. However, the phased increase is a bit too reluctant, because the epidemic recovery and the progress of vaccine popularization are difficult to improve in the first quarter. The market start time and the actual improvement time are mismatched. Beware of the inconsistency between expectations and facts. Crude oil operation center of gravity continues to rise in the short-term support is not very solid, and the contradiction between PTA supply and demand may intensify, it is recommended that the PTA2105 contract only rallies to leave.