Both Cost and Demand Weighing Down PTA Prices, Leading to Volatile Declines

May 24th News

Under the dual negative impact of costs and demand, the PTA market in China showed a downward trend this week. According to the commodity market analysis system, the PTA spot market in the East China region showed a decline this week (May 18-24), with the average price at the beginning of the week at 6,345 CNY/ton, a decrease of 5.33% from the start of the week.

With declining cost support and repeated U.S.-Iran negotiations, international crude oil prices have been highly volatile amid geopolitical factors. As of May 21, the settlement price for the July contract of U.S. WTI crude oil futures stood at $96.35 per barrel, while the settlement price for the July contract of Brent crude oil futures reached $102.58 per barrel. In the PX market, maintenance at some Chinese plants may be postponed, and downstream PTA plants are also scheduled for concentrated maintenance. Moreover, polyester plants are showing further intentions to cut production. Market sentiment remains cautious, with weak confidence weighing on prices and driving them downward.

From the perspective of PTA’s own facilities, the industry’s operating rate is currently around 60%. In China, plant restarts and maintenance activities are proceeding in parallel. Although a few more units still have planned maintenance scheduled, most maintenance work is nearing completion; however, China’s supply remains relatively tight in the short term. Specifically, Ningbo Taihua’s No. 1 PTA unit with a capacity of 1.2 million tons resumed operations on May 9, while its No. 2 unit with a capacity of 1.5 million tons was shut down on May 10 and has not yet resumed production. Jiatong Energy’s No. 2 PTA unit, with an annual capacity of 3 million tons, was shut down on May 20, and its restart date remains undetermined. Hengli Huizhou’s No. 1 PTA unit, with a capacity of 2.5 million tons, was shut down on May 10, and its restart date is also yet to be announced. Yisheng Dahuahua has a total PTA capacity of 6 million tons per year; among them, the No. 1 unit with a capacity of 2.25 million tons is scheduled to resume operations in July, while the No. 2 unit with a capacity of 3.75 million tons is slated for technical upgrades in July as well.

Downstream polyester and weaving operations are sluggish, with weaving operations in Jiangsu and Zhejiang operating at only around 50%, resisting high prices, and mainly engaging in rigid demand procurement. Domestic textile sales are weak, with new orders showing weak demand. In the short term, there are still some seasonal backorders that have not been completed, but subsequent order prospects are not optimistic. Terminal clothing companies show low interest in autumn and winter new product orders, coupled with the accumulation of fabric inventory both upstream and downstream, multiple factors are jointly constraining the increase in factory operations. The peak season is not as strong as expected, and demand recovery has fallen short of expectations.

Analysts believe that as the situation between the United States and Iran eases, and Asian refineries show weak purchasing, oil prices will find it difficult to sustain a significant rise, with cost support weakening. PTA itself is in a maintenance cycle, with a considerable reduction in supply; starting from June, maintenance units will gradually restart, leading to a marginal easing of supply. The downstream textile off-season continues, with demand mainly driven by essential needs. It is expected that the price level of PTA will continue to decline.

Additionally, according to Xianhuotong, the 10-day moving average has crossed below the 20-day moving average, and the difference between the two averages continues to widen in a negative direction. The 10-day and 20-day moving averages are diverging further, indicating that the PTA market is entering a downward channel.

Combining the 5-tier position: The current price is at a high to mid-high level in terms of one year and 90-day periods, and caution is needed against short-term downward risks.