Cost Factors Dominate The PTA Market Will Continue to Rise

On March 9, the domestic PTA market rose sharply. The average market price in East China was 6,555 CNY/ton, an increase of 3.49% over the previous day and a year-on-year increase of 42.33%. The main futures 2205 closed at 6552 and settled at 6478, up 288, or 4.60%.

International crude oil futures prices continued to rise. On March 8, the settlement price of the main U.S. WTI crude oil futures contract was reported at US$123.70/barrel, an increase of US$4.3 or 3.6%; the settlement price of the main Brent crude oil futures contract was reported at US$127.98/barrel, an increase of US$4.77 or 3.9%. The situation in Russia and Ukraine is in turmoil, sanctions against Russia by the Western camp continue to escalate, the United States proposes to ban the import of Russian crude oil, and the United Kingdom also said that it will gradually stop importing Russian crude oil by the end of the year, and the global oil supply is expected to continue to tighten.

From the perspective of supply and demand, Yizheng Chemical Fiber's 350,000-ton PTA plant was overhauled on March 1 for about 20 days. Fuhai Chuang's 4.5 million tons/year PTA unit will reduce the load to 80% in early March 2022. Chuanneng Chemical's PTA plant with an annual output of 1 million tons was shut down for about a week on March 5. The PTA overhaul has increased or the restart has been delayed, and the current industry start-up is around 76%.

The cost pressure is prominent, and the downstream polyester market is bound to follow the rising trend of raw materials, but the current mainstream factories in Jiangsu and Zhejiang have a strong wait-and-see mood, and today's prices are generally flat. Terminal textile enterprises are hesitant to place orders due to high oil prices, high transportation costs, and the risk of the epidemic. At present, orders are scarce in spring and summer, and the operating rate of the weaving industry has increased slowly, maintaining around 65%.

Under the low processing fee of PTA, the supply will further shrink, and the downstream polyester market will not be prosperous. Crude oil rose again, and the cost factor continued to dominate the PTA market. It is expected that the short-term PTA market will continue to run upwards.