Cost-side support weakens, PTA price center of gravity continues to shift downward

May 26th News

On May 25, the international crude oil market experienced violent fluctuations, with oil prices plunging sharply by more than 7% in a single day—a rare price drop seen recently. Among them, Brent crude oil futures fell by $7.26, representing a price decrease of 7.02%, closing at $96.14 per barrel; U.S. WTI crude oil futures dropped by $6.30, with a price decrease of 6.52%, settling at $90.30 per barrel. The core driver behind this sharp plunge was the market’s optimistic anticipation of a peace agreement between the U.S. and Iran and the resumption of navigation through the Strait of Hormuz. Although both sides have downplayed expectations of a breakthrough and actual supply restoration is still expected to take time, the concentrated unwinding of geopolitical risk premiums has directly triggered a substantial correction in oil prices.

PTA prices followed the decline in cost, with a moderate market negotiation atmosphere, mainly driven by discussions among traders. According to the commodity market analysis system, on May 26, the average market price in East China was 6160 CNY/ton, a decrease of 0.52% from the previous trading day. From the perspective of domestic supply, due to continuously compressed processing profits and limited raw material supply, PTA plant maintenance has increased. Recently, an unexpected shutdown of a 2.5 million ton facility in East China occurred around May 24, with an estimated duration of 7-10 days. As of May 21, the operating rate of PTA plants was around 60%, below the historical average for the same period. The low operating rate of PTA plants will further reduce inventory.

However, the textile market at the terminal end is experiencing a strong off-season atmosphere, with insufficient orders and downstream manufacturers producing only on demand. In the domestic market, summer fabric orders are nearing completion, and weaving enterprises generally adopt a strategy of reducing capacity and cutting production. Enterprises are strictly controlling raw material inventories and implementing a “rigid demand procurement, fast in and fast out” strategy, adopting a rather cautious approach to inventory management. In the polyester industry—particularly polyester filament and staple fiber—their performance has been weighed down by continued destocking in the weaving stage and a shortage of greige fabric orders, prompting mainstream companies to passively reduce capacity and cut production. Polyester bottle flakes, by contrast, have shown relatively better performance. Currently, we’re in the peak season for beverage packaging consumption, and exports are also seeing increased demand, keeping the industry’s operating rate stable.

Looking ahead, the support from the cost side is weakening, with crude oil prices falling and the short-term destocking process of PX not meeting expectations, increasing cost pressures and adding downward momentum to PTA prices. Downstream buyers are mainly replenishing stocks based on rigid demand, with a cautious stocking mentality, and the continuous low demand is weighing on the market. Analysts believe that in the short term, PTA prices will continue to maintain a weak and volatile trend.