PTA does not have deep drop condition

At present, the market supply is more than demand, the technology falls below the important support position, and the weak pattern will continue. However, considering the low processing cost and the stability of the upstream price in the near future, PTA price does not have a deep drop condition. Under the influence of increasing supply pressure, PTA futures showed an oscillating downward trend. In late October, PTA price fell below the support level formed by the year's low point and 2017's low point. Technically, downward space opened. In October, affected by routine maintenance and other factors, the starting load of PTA in China fell to 83.06%, and the market supply entered a stage of tightening. However, the maintenance cycle of this round is relatively short, and the devices for early maintenance have been put back into production in late October and early November.

At present, the units under maintenance in China are: the 600000 ton unit of Jialong Petrochemical will be back to production this month, the 2.2 million ton unit of Jiangyin Hanbang will be back to production in the first ten days of this month, and the 2.2 million ton unit of Hengli Petrochemical is expected to be back to production next week. Accordingly, this month only the 750000 ton unit of Yadong Petrochemical Company is planned to be overhauled, and the 1.2 million ton unit of hailun Petrochemical Company is expected to be overhauled by the end of the year. Therefore, without any accident, the starting load of PTA in China will rise steadily in the later period. In addition, Hengli Petrochemical phase 4 and Xinjiang Zhongtai are still expected to be put into production at the end of the year, so the supply pressure will continue to increase the pressure on PTA prices. In terms of demand, although 300000 tons of new Fengming Zhongyue and 50000 tons of Fuller's Polyester new units were put into production in October, due to the current poor profit of polyester enterprises, there are more intensive enterprise maintenance. It is understood that the 250000 ton polyester plant of Yizheng petrochemical, the 500000 ton plant of Taibao, the 300000 ton plant of China Resources and the 70000 ton plant of Jinxing have been shut down successively. And there are still plans to shut down Chenggao's 600000 ton plant this month. In this case, the domestic polyester starting load dropped from 90% at the beginning of October to the current level of 86.72%. With the cooling down of the winter load, the starting load of Jiangsu and Zhejiang looms is also showing a small decline, and the demand is weakening.

PTA supply is increasing, while demand is further weakening, and the problem of supply exceeding demand is prominent, which determines that PTA price is difficult to improve before the end of the year, and the weakness will continue. From the perspective of cost side, the recent crude oil price has started a small rebound trend. After winter in the northern hemisphere, heating oil consumption is expected to increase. On the other hand, the number of active drilling wells in the United States is expected to decline. Under the background of tight supply and rising demand, American crude oil is expected to enter the de stocking stage, which helps to support the price of crude oil. Therefore, there will be no cost collapse of chemicals.

PX market, although Fuhai Chuang's PX device will resume production, the PX supply and demand structure is relatively stable when PTA starts to rise, and it is expected that the PX price will stabilize in the later stage. Therefore, we think PTA production cost will stabilize at the current level in November. At the same time, the processing fee is only 600 CNY/ton, which will also support PTA price. To sum up, PTA prices fall behind the important support position and the weak pattern appears. At present, PTA start-up load is increasing, and new units are expected to be put into operation, with supply pressure increasing. At the same time, the downstream polyester load is reduced due to the poor profit. The further deterioration of supply over demand determines that the weak pattern of PTA will continue. However, considering the stable price of upstream crude oil and PX and the low processing cost, PTA price does not have the conditions for a big drop.