July 29th, news
In early July, relying on a slight rebound in crude oil and the advanced maintenance cycle of PX facilities, PTA prices fluctuated upwards. In mid to late July, prices continued to rise, with the escalation of conflicts in the Middle East pushing Brent crude oil above $100 per barrel. At the same time, large-scale maintenance of PX facilities in China and Asia led to a drop in the operating rate of Asian PX to a yearly low of 56.6%. Multiple major PTA plants also shut down simultaneously, causing the industry's operating rate to fall to its lowest level of 53%~57%, with port inventories continuously decreasing. Although there was a slight pullback at the end of the month, prices subsequently stabilized and recovered due to support from crude oil and low inventory levels. As of July 29, the spot price of PTA in the East China region was 6,017 CNY per ton, an increase of 4.15% from the beginning of the month.
In July, large-scale PX facilities of Shenghong, Zhejiang Petrochemical, and Hainan Refining underwent concentrated maintenance, leading to a tightening of supply and strengthening PX quotes. Additionally, the US-Iran conflict added cost-side support. Furthermore, in July, major PTA facilities of Weilian Chemical, Honggang Petrochemical, and Zhongtai were shut down, reducing monthly production to its lowest point of the year. Social inventory and factory raw material inventory continued to decline. However, the downstream sector was in the traditional textile off-season, with loom operating rates at only around 59% due to the high temperatures in July. Polyester factories had high finished product inventories, and there was no willingness for end-users to actively stockpile, only maintaining minimal purchases based on immediate needs, which weighed on the PTA market. Moreover, the expectation of the concentrated restart of PTA maintenance facilities, with a combined capacity of several million tons from Fuhai Chuang, Honggang Petrochemical, and Yisheng Dalian scheduled to resume production at the end of July to early August, led to expectations of a more relaxed supply, causing funds to take profits and exit, resulting in a rapid drop in prices at the end of the month.
Looking ahead, analysts believe that the short-term resumption of PTA maintenance and the gradual restart of facilities will slightly ease supply, but the slower pace of PX facility restarts will continue the tight PX supply situation, keeping costs high and supporting prices. Coupled with low inventory levels following earlier destocking, it is unlikely for prices to see a significant drop. As the textile industry begins concentrated restocking of autumn and winter fabrics in late August, the operating rates of downstream polyester will steadily recover, leading to marginal improvements in demand. Although PTA supply will resume, the growth in downstream demand will temporarily outpace the increase in supply, bringing the industry back to a tight balance, with the price level expected to gently rise again. It remains necessary to monitor changes in the geopolitical situation of crude oil in the Middle East, the progress of PX maintenance and restarts, and the implementation of downstream weaving orders for autumn and winter.
