Cost pressures? Chemical and Crude Correlation is Weakening

In the 2022 market, the black and chemical sectors are relatively weak, black by the impact of real estate data, while the cost support end of the chemical industry - crude oil, up like a rainbow, why is the chemical industry is so weak?

International crude oil topped on February 14, the chemical sector topped on February 7, in fact, the marginal drive of crude oil rose in weakening, in the case of relative pressure on demand, the chemical sector is retracting the previous rally of the oversold part, that is, a relatively reasonable return to value.

Crude oil in the global crude oil supply tension, the United States had to make concessions to Iran, the Iranian nuclear agreement negotiations are nearing the end, Iran's 1.3 million barrels per day capacity release is not impossible, which will then make the total global supply increased by about 1%.

Energy demand has recovered strongly after the epidemic, with mainstream institutions raising their forecasts for global crude oil demand in 2022. the inability of OPEC+ to maintain a 400,000 bpd production increase pace, coupled with low global crude oil inventories also adds to the crude oil supply and demand tension.

While many believe that crude oil will not last long at such high prices, inflationary outcomes do not change because of forecasts and supply and demand ultimately determine the direction of crude oil prices.

PTA in chemical varieties, PTA and crude oil correlation is very high, because the intermediate production steps are less, so is also the chemical rebound market trend is relatively good, strong cost support. Most of the chemical varieties are affected by real estate (demand side), coal prices (cost side), but PTA downstream is the production of clothing, demand is relatively stable, and 2021 driven by foreign demand, China's foreign trade in clothing is good, supporting the price of PTA and cotton.

(1) polyester is currently in a weakened production and sales situation, the cost of raw materials due to price reductions and decline, cash flow is relatively adequate and expansion, and then transferred to the production side, inventory continues to expand and accelerate backfill;

(2) start-up rate, PTA plant start-up rate slipped to 76.8%, the average start-up rate of 78.4% during the month;

(3) this week, PTA processing fee into the lowest level in history, less than 300 CNY/ton.

PTA Spot market transactions are still relatively active, PTA factory inventory is currently under general pressure, futures traders generally hold positive hedging positions, basis difference monthly difference synchronized stabilization slightly.

Methanol domestic methanol more than 60% is made of coal, of which coal mono-alcohol accounted for the highest proportion (no by-products), followed by coke oven gas production of methanol, natural gas production of methanol, coal co-alcohol (while producing products such as urea) production accounted for a relatively small, in addition to imports accounted for about 15%.

(1) On the supply side, Southwest natural gas enterprises reduce supply due to Central Asia natural gas pipeline problems and cooling effects, leading to the decline of national methanol start-up rate, and short-term supply is suppressed. This week, the average start-up load of methanol to olefin plant is at 82.8%, down 4.7 percentage points from the last cycle, and the average negative 90.1% of MTO plant for external methanol extraction;

(2) In terms of inventory, coastal methanol inventory dropped by 100,500 tons compared with last week, and the circulating supply of methanol in coastal area is around 207,000 tons, and the arrival of imported shipments in coastal area is expected to be 480,000 tons from late February to early March.

Polyolefins

(1) supply: PE short-term start rate decreased due to parking, PP start rate remained high, the overall polyolefin domestic start rate is high. Domestic PP has low price advantage and export continues to increase;

(2) demand: spot transaction has improved better and enterprises are relatively active in replenishing storage. There is no new increment from the order point of view, and the restoration of work is the main focus;

(3) inventory: petrochemical PE + PP inventory of 1.08 million tons, rising to a record high, the social library PE/LL/PP continued seasonal accumulation, but the ring tends to slow down, especially LLDPE;

(4) the northern film start significantly improved, the new orders for shed film reflects the increment, but the start rate is slow to improve; upstream two oil and coal enterprises inventory continues to accumulate, downstream procurement Cautious, mostly just small single purchase.

In summary, when crude oil is hitting high, the correlation between chemical varieties and crude oil is weakening due to cost pressure, especially when it rises, so in the absence of obvious improvement in demand, we cannot be blindly overly optimistic because of the rise of crude oil.

The varieties that follow crude oil more closely, such as PTA, asphalt (3648, 10.00, 0.27%), because of its direct cracking without too much processing links, the price is more following crude oil, but we can see that petrochemical varieties generally have excess capacity, high production, high inventory, from the perspective of supply and demand, the chemical is not much room for upward movement.

Long processing chain of petrochemical processing profit may continue to decline with the strengthening of crude oil.