Costs Support Tight Supply, PTA Prices Remain Up in May

In May, the domestic PTA market maintained a volatile upward trend, at a 3-year high. As of May 31, the average market price was 6,900 CNY/ton, an increase of 7.37% from the beginning of the month and a year-on-year increase of 46.97%. The favorable cost side pushed up the price of PTA. In addition, PTA production suffered losses. Some units maintained production reduction or maintenance status, and the supply side decreased.

As of May 30, the settlement price of the main Brent crude oil futures contract was $117.60 per barrel, and the July Brent contract exceeded $120, hitting the highest level in more than two months. In this case, the tightening of supply and the expectation of peak driving season in the United States have significantly supported oil prices.

The operating rate of PX plants in Asia has declined recently. Overall, the operating rate of paraxylene plants in Asia is less than 60%. The supply of PX in Asia is tight, and the closing price of PX outside the market has risen. As of the 27th, the closing price is 1264-1266 US dollars / ton FOB Korea And 1292-1294 US dollars / ton CFR China. This led to a sharp rise in the domestic market price of paraxylene. By the end of the month, the domestic ex-factory price of paraxylene was 9,900 CNY/ton, an increase of 11.24% from the price at the beginning of the month of 8,900 CNY/ton and a year-on-year increase of 54.69%.

In terms of supply, under the low processing fee, the PTA plant has undergone more maintenance and load reduction. The current operating load has dropped to below 68%, and the market spot liquidity has tightened. In terms of inventory, PTA social inventory fell to 2.74 million tons.

Affected by the boost of raw materials, the price of the downstream polyester market has also risen, among which polyester filament products have risen by 6%-11%. However, the current inventory of finished products in polyester factories is on the high side, and at the same time, there is resistance to high-priced raw materials. At the same time, the terminal market is in the traditional off-season, and the comprehensive operating rate of Jiangsu and Zhejiang looms is below 60%, which is a drag on the demand side of PTA.

Analysts believe that crude oil and PX fluctuate at a high level, and the cost remains high, which will still form a positive support for the cost of PTA. Under the low processing cost, the load of the PTA unit will also remain low. The performance of the terminal market is still weak, and the production and sales of polyester are difficult to improve, which is suppressed by the sluggish demand. In general, PTA remained high and fluctuated in June under the support of costs.