Operating rate remains high, PTA price still has room for upside

In the case of strong crude oil price fluctuations, low PTA profits and more self-maintenance to offset the negative impact of new production, stocks at both ends of the futures continue to fall, and the overall operating rate of downstream polyester plants remains high, PTA prices continue to rise space.

Since April, PTA futures have oscillated higher. From a technical point of view, the integer mark of 5,000 CNY/ton and the previous high of 5,070 CNY/ton constitute a pressure level. However, from a fundamental analysis, PTA can still see a higher line.

Stronger support on the cost side

At the macro level, the European and American economies have recovered strongly. The manufacturing and non-manufacturing PMIs of the United States and the United Kingdom were both above 60 in April. The manufacturing PMI of the Eurozone was also above 60. The service industry PMI has also returned to 50.5 above the line of prosperity and decline. The overall situation is improving. The US April non-agricultural data unexpectedly fell short of expectations. The Fed is expected to remain dovish until the employment data is fully improved. It is foreseeable that inflation will still exist for a period of time in the future, and the prices of crude oil and naphtha will oscillate slightly with global commodities, and the center of gravity will move upward.

At the micro level, the OPEC+ meeting finalized the production plan for May-July, and it is difficult for the US crude oil production to increase rapidly in the first half of the year. Crude oil supply will remain tight from May to July, and global crude oil inventories have returned to normal from last year's absolute high, and the support below is relatively solid.

More overhaul devices in May

At present, although PTA processing profit has rebounded from the previous period, it is still at a low level overall. Since the end of March, although new production capacity has been put into operation, the actual PTA output in April has fallen from March because the operating rate has plummeted from 82% to 75.2%. A new batch of new production capacity will be put into production in May, but there are also more devices planned to be overhauled. It is expected that the output in May will have a limited rebound compared with April. In addition, the delayed restart of some devices will also cause additional maintenance losses. In the case of low processing cash flow, it is not ruled out that unexpected temporary shutdowns will occur, leading to a further decline in PTA production.

In terms of inventory, PTA social stocks and futures stocks continued to narrow. The latest PTA social stocks narrowed by nearly 20% compared with the end of March, and the total futures warehouse receipts containing effective forecasts narrowed by more than 33%. The convergence rate was much faster than the same period in previous years. , Mainstream market consulting agencies generally predict that PTA will continue its de-stocking rhythm in May. In this context, changes in output are more sensitive to market fluctuations.

Downstream demand continues to be strong

This year, the operating rate of the domestic polyester industry remains high. Although polyester profits continue to decline, filament and staple fiber still have certain profits. Throughout April, the polyester plant operating load rate remained above 90%, and the peak was close to 92%. In early May, it fell slightly from 91.98% to 91.3%; the operating rate of looms in Jiangsu and Zhejiang dropped from 85.95% at the end of March to 81.97%, but It is still at a high level in the same period in history. Despite the accumulation of polyester inventory and the traditional low season for demand in May, the polyester operating rate may still maintain inertia.

Due to the aggravation of the epidemic in India, the return of orders boosted the domestic polyester market. According to incomplete statistics, at present, of India’s 28 local states and capital jurisdictions, three-quarters of the local states and capitals have implemented blockade measures, with varying degrees of stringency. It is understood that the spread and fatality rate of this round of the epidemic in India are both higher than in the past, and the weather is getting hotter, it can be foreseen that orders will return or continue for a period of time in the future, as a supplement to the domestic polyester demand in the off-season. At the same time, with a certain profit, the polyester staple fiber factory is not much overhauled, and the overall operating rate of the polyester industry will remain high.

In summary, PTA prices still have room to rise, and once they effectively stand firm at RMB 5,000/ton, they will challenge the pressure of RMB 5,500/ton. In terms of risks, the main concern is the short-term impact of the colonial pipeline incident and the delayed restart of the PTA unit on the market, as well as the verification that the operating rate of the polyester plant in May remained high during the traditional off-season of demand. In terms of operation, do more on dips in the range of 4800-5000 CNY/ton.