Strong Cost Support Drives PTA Prices Higher in January

January 31st, according to news,

Commodity market analysis system, in January, the PTA market in China first declined then rose. By January 31st, the PTA spot price in the East China region was 5298 CNY/ton, an increase of 4.33% from the beginning of the month.

At the beginning of the month, demand-side support was insufficient, and there were many external instability factors, leading to an overall pessimistic sentiment toward chemical products. As a result, PTA prices experienced a narrow, weak adjustment during the first half of the month. Starting in the latter half of the month, influenced by geopolitical factors, oil prices continued to rise strongly, providing solid cost-side support. In addition, overall commodity sentiment began to recover, and capital showed a preference for these assets, further boosting PTA prices.

In terms of domestic supply, the PTA industry's operating rate was at 75% by the end of the month. Hanbang Petrochemical's 2,200,000 tons facility stopped on January 6th, Yisheng New Material's 3,600,000 tons facility stopped on January 14th, and Dushan Energy's 3,000,000 tons facility restarted on January 14th. Zhuhai BP's 1,250,000 tons facility stopped on January 16th. Currently, there is not much change in the supply side. With the continuous reduction in load at the terminal and the expansion of the downstream polyester load range, it is expected that the PTA social inventory will also increase.

Currently, crude oil market prices are on the rise. As of January 29, the settlement price for the March WTI crude oil futures contract in the U.S. stood at $65.42 per barrel, while the settlement price for the April Brent crude oil futures contract reached $69.59 per barrel. The crude oil market is being driven by a confluence of positive factors, including supply disruptions caused by the winter storm in the U.S. and escalating geopolitical tensions in the Middle East. At the heart of this rally is the significant short-term disruption to supply, coupled with a resurgence in geopolitical risk premiums, which has triggered a concentrated release of bullish sentiment, leading to continued upward momentum in crude oil prices.

As the Spring Festival approaches, multiple polyester plant maintenance schedules are in place, and industry output continues to decline significantly to around 81%. After entering February, with the Spring Festival drawing closer, many facilities in the industry plan to reduce production and undergo maintenance, leading to an expected significant decrease in China's polyester industry supply. Among these, the price of polyester filament yarn has rapidly increased following the rise in raw material costs, but it is difficult for the increase to be passed on to downstream markets. The main focus is on consuming raw material inventories, with passive restocking occurring due to the rapid rise in raw material prices. Polyester staple fiber prices have also risen, with the price increase stimulating sales, resulting in a noticeable depletion of staple fiber inventories by the end of the month.

Analysts believe that in the short term, the market will be affected by weakening demand, as downstream polyester plants in China reduce production during the Spring Festival, leading to a buildup in PTA supply and demand. However, in the long term, the PTA industry in China will enter a capacity vacuum period in 2026, with no new capacity additions. As the cycle of concentrated capacity additions comes to an end, PTA processing fees are expected to gradually improve, and the long-term outlook remains positive.