Chemical futures 'ice and fire' fundamentals become the dominant factor

On Monday, July 22, some domestic chemical futures staged a "two-day ice and fire" market. On the one hand, the price of the main 1909 contract of PTA futures led the decline of commodity futures, while on the other hand, the main 1912 contract of asphalt futures led the rise of commodity futures by more than 2%. Analysts said that in recent years, the impact of upstream crude oil prices on the downstream trend of chemical products has weakened, and chemical products are divergent under the domination of their own fundamentals. Looking forward to the future market, under the background of decreasing asphalt supply and decreasing PTA demand, the trend of future price differentiation will continue. On Monday, the domestic chemical futures continued to diverge. Among them, the price of the main 1909 contract of PTA futures closed at 5,596 CNY/ton, a new low since June 24, falling 296 yuan or 5.02%. After the establishment of "Four Lianyin" on the Japanese K-line, the price of the main 1912 contract of asphalt futures rose to 3,352 CNY/ton, up 78 yuan or 2.38%.

"The fundamental reason for the sharp drop in PTA futures price is the weak demand side of polyester." As a matter of fact, since last week, PTA futures prices have shown a weak fluctuation as a whole due to the reduction of production and the increase of shutdown of polyester enterprises, according to Li Yanjie of CITIC Futures Energy and Chemical Business Department. However, the spot market remained tight due to the maintenance period of Fuhai Trading Equipment and the possibility of suspension of contract supply by some factories. The main 1909 contract price was once supported at 5800 yuan per ton. Yesterday, the spot market seems to have changed, the most direct manifestation of which is the sharp decline in quotations. On the spot side, Zhuochuang data show that the price of PTA spot market in East China on July 22 morning was 6400 yuan per ton, while on July 18, the price was still firm at 6750 yuan per ton.

For asphalt futures, Zheng Ruojin, an analyst at CITIC Anxin Futures, said that at present, with the potential risks of stabilizing crude oil prices and tightening the spot supply of asphalt, and with the coming "plum" in eastern China, the downstream demand is expected to rebound, asphalt futures prices in the third quarter are expected to maintain a volatile upward pattern. This is the case.

Fundamentals are the dominant factor

Recent crude oil price performance has weakened the guiding role of downstream chemical products, and each chemical product operates independently under its own fundamentals. Industry insiders said that from the current basic situation, the future trend of price differentiation of chemical products will continue.

Asphalt, CITIC futures analysts said that the recent refinery start-up to maintain a stable level, inventory levels continue to decline, and social inventory growth slowed down, demand improved to make the country's multi-site spot asphalt prices increased. Although the spot price of asphalt and refined oil has been lower than that of crude oil before, the profit of refineries has improved greatly, and the start-up of refineries is expected to be driven by profit. On July 10, Zibo started the peak production in summer and autumn, and the output of atmospheric and vacuum distillation units has been limited by 30%. Sinopec's output reduction is still continuing and the increase in start-up is limited. In addition, from July to August, Russia Petroleum Corporation (Rosneft) supplied three ships of Marui crude oil to China, but in July domestic crude oil arrived in Hong Kong decreased by 500,000 tons to 91,000 tons (presumably delayed), and this July 27 is the final exemption period for Chevron's oil project in Venezuela. Asphalt raw materials need continuous attention. Therefore, in anticipation of a decline in supply, the expected price pressure of asphalt will be released after base difference repair. In terms of operation, we continue to recommend multi-asphalt-WTI price difference. In terms of PTA, the above-mentioned analysts indicated that the load of PTA device was stable, and that the end of Fuhaichuang overhaul was imminent, or brought about an increase in supply. In addition, polyester load continued to decline, demand-side weakened and there was no sign of improvement in the short term (low fluctuations in production and sales of polyester products, stock rebound, price decline and cash flow decline). In addition, some polyester factories sell the surplus of contract supply in the spot market, and PTA spot circulation has increased. Therefore, in the context of weakening demand and increasing supply, it is suggested that PTA futures should be sold short at high prices.

Li Yanjie also believed that although the PTA futures price may rebound in the short term, the Fuhai Chuang plant will be restarted soon, and there is no obvious improvement in polyester end demand, the futures price will still be mainly weak.