Processing Fees Have Dropped by Nearly 47%, and PTA Manufacturers are Facing Losses

Although the post-holiday polyester products had a good start on the first day, the rally failed to continue. Recently, the prices of various polyester varieties have been adjusted to varying degrees.

At the same time, the processing fees of PTA (5372, 12.00, 0.22%) and the profit of oil-based ethylene glycol have been greatly compressed to a state of loss. The production and sales of the polyester market after the holiday are sluggish. Even after the fifteenth day of the first lunar month, the pace of downstream resumption of work is still relatively slow, and the overall polyester market performance is lower than market expectations.

After the Spring Festival, the processing fee has dropped significantly

A reporter from the Futures Daily learned from the chemical fiber information network that recently, the PTA processing fee has shown a trend of rapid compression. From 576 CNY/ton before the Spring Festival to 306 CNY/ton, a drop of nearly 47%, the lowest since May 2020, PTA manufacturers are facing losses again.

And ethylene glycol is showing a state of overall loss, of which the theoretical loss of the integrated naphtha unit has reached a historical high of 170 US dollars / ton.

"PTA processing fees dropped sharply after the Spring Festival, mainly due to the normal operation of PTA units and the seasonal maintenance of downstream polyester during the Spring Festival, resulting in abundant market spot after the seasonal accumulation of PTA and pressure on prices." Pang Chunyan, analyst at SDIC Anxin Futures Express.

In fact, in the PTA industry chain, the processing fee is an indispensable factor in judging the market prosperity. The processing fee reflects the profit of PTA spot processing, and is also the focus of market participants in each survey.

According to industry insiders, the level of processing fees will directly affect the production enthusiasm of enterprises, and then affect the price through supply.

"Under normal circumstances, if the processing fee is high, the profit of PTA production is good, the production enthusiasm of the enterprise is high, and the supply of PTA is expected to increase; the processing fee is low, the production enthusiasm of the enterprise is low, and the supply of PTA is expected to decrease." Pang Chunyan said.

According to Pang Chunyan, from 2014 to 2016, the PTA processing fee was at a low level, and some high-cost installations were difficult to make profits. Therefore, Fujian Jialong 600,000 tons, Pengwei Petrochemical 900,000 tons, Hanbang Petrochemical 700,000 tons and Yisheng The 650,000-ton petrochemical small plant was shut down for a long time, and the less profitable plants such as Liaoyang Petrochemical 800,000 tons, BP Petrochemical 600,000 tons, and Yisheng Ningbo 650,000 tons directly exited the PTA market.

Since the end of 2016, the PTA processing fee has rebounded, and some old plants that have been parked for a long time have begun to plan to restart. In 2018, the processing fee of PTA remained at a relatively high level as a whole, the production enthusiasm of enterprises was very high, and overproduction was common, and this high processing fee continued until 2019.

"After entering 2019, with the acceleration of the commissioning of integrated refining and chemical units, the growth of polyester has slowed down due to the epidemic, and PTA inventories have increased significantly.

PTA manufacturers are once again faced with the dilemma of excess capacity, and high processing fees will decrease as new production capacity is put into operation. This is a phenomenon in which the PTA industry chain has entered a situation of oversupply, and the market is clearing excess capacity by compressing profits." said Liu Siqi, an analyst at Tianfeng Futures.

Pang Chunyan told reporters that in recent years, the PTA production scale of leading enterprises has continued to expand, and the cost advantages of large enterprises are obvious.

In addition, the balance point of PTA processing fee mentioned in the market is 580 CNY/ton, which is only the average situation of the industry, and the actual processing fee of each enterprise will be different.

In the eyes of industry insiders, at present, the processing fee of PTA is at a low level. On the one hand, the industry is in a period of capacity expansion, and the supply growth is obvious.

In addition, the new capacity represents a state-of-the-art production process and production costs are reduced. The low processing fee in the past two years is the result of the rapid development of the industry, which is related to a variety of factors.