Supply and Demand Lacking Vigor, PTA Prices Fluctuate Weakly in September

September 29, News

In September, the Chinese PTA market continued to decline before bottoming out and recovering. According to the commodity market analysis system, by the end of September, the average market price in East China was 4612 CNY/ton, a decrease of 3.01% from the beginning of the month. Concerns over increased crude oil production, expectations of increased PTA supply, and lukewarm demand led to a decline in the first half of September. At the end of the month, the ongoing Russia-Ukraine conflict triggered potential supply risks, leading to a rebound in crude oil prices, and pre-holiday restocking by downstream sectors improved supply and demand, resulting in a slight recovery in PTA prices from their lows.

The crude oil market is being influenced by a mix of bullish and bearish factors, leading to significant price volatility throughout September. As of the 26th, the settlement price for the November WTI crude oil futures contract in the U.S. stood at $65.72 per barrel, while the December Brent crude oil futures settled at $69.22 per barrel. On one hand, geopolitical concerns remain a key driver in the oil market, with the Russia-Ukraine situation continuing to push prices higher. Additionally, the Federal Reserve’s interest rate cut has provided a positive boost to international oil markets, further supporting crude oil prices. On the other hand, Saudi Arabia may increase its oil production, while rising U.S. crude inventories, coupled with the end of the peak driving season in the U.S., are weighing on the market. Moreover, broader global economic uncertainties and weaker-than-expected oil demand forecasts are putting downward pressure on crude oil prices.

In September, PTA plant maintenance and restarts coexisted, with the current PTA industry operating load around 77%, and significant changes in facility supply, but overall spot supply remains loose, with a slight accumulation of social inventory. According to the maintenance schedule, the 1200,000-ton Xinjiang Zhongtai PTA unit has been shut down for maintenance since September 19th for two weeks, the Ineos Phase 2 1,100,000-ton unit is expected to start maintenance in mid to late October, and the Hengli Petrochemical Dalian unit plans to begin its annual maintenance on October 11th. In terms of new capacity, since the beginning of this year, China's PTA has added 5,700,000 tons of new capacity, with a capacity growth rate of 6.62%. If the Dushan Energy Phase 4 3,000,000-ton unit is commissioned as scheduled in October, the total capacity growth rate of the PTA industry will further increase to 10.11%, and the market supply pressure will further increase.

At the end of the month, influenced by the pre-holiday period, some downstream polyester factories made small-scale replenishments, leading to a local recovery in production and sales. Currently, it is during the traditional "Golden September, Silver October" consumption peak season, but the downstream polyester market has not seen the expected significant increase in demand, with the overall market performance being lukewarm, providing limited support for the upstream PTA prices. The terminal orders have shown a mild improvement, but the order volume remains average, and due to the high inventory status, weaving factories are cautious about purchasing raw materials like polyester filament, mainly focusing on small batches.

Analysts believe that the weakening of cost support and the continuous release of new PTA capacity have intensified market concerns over supply surplus. Before the National Day holiday, downstream restocking has largely concluded, and the situation of ample supply is expected to continue, with PTA prices likely to remain weak in October.