PTA pessimism

Novel coronavirus pneumonia outbreak in 2020 was a very pessimistic market in the context of supply surge, and the outbreak of the new crown pneumonia outbreak earlier this year swept across the country, dragging down downstream demand. After the festival, PTA period price jumped sharply. Although it rebounded recently, under the influence of the general delay in the resumption of work in the terminal industry this year, the contradiction between PTA supply and demand has increased, making it difficult to get out of the weak situation in the short term. The unexpected cost-end unsupported public health event triggered the market's concern about the future oil demand. With the decline of crude oil price, PTA market was bleak. Although the recent period price rebounded slightly, the market weakness has not been reversed. In 2019, a new PX capacity of 8.33 million tons was added in China, with a growth rate of 57%. The large expansion of raw material end increased the pressure of polyester industry chain.

At present, the domestic PX operation rate is about 78%. After the year, the second 2 million ton PX plant of Zhejiang Petrochemical Co., Ltd. has been opened, and the overall PX supply will continue to increase. With the release of new production capacity, PX processing fee has been reduced again and again. In the near future, PX naphtha price difference continues to be around $250 / ton. It is difficult for PX industry to improve its profits, and PTA cost end has no support. Since January 2020, supply pressure has increased, and Xinjiang Zhongtai Kunyu and Hengli Petrochemical (600346, Stock bar) 4 × new capacity has been released one after another, bringing 3.7 million tons / year increment in total. Although some units are subject to periodic maintenance or negative load reduction in the near future, the capacity loss in February is about 700000 tons, but the overall operating rate of PTA industry is still at a high level of about 82%. Compared with the low load of downstream market, the pressure on PTA supply end is relatively obvious. At present, the raw material cost of PTA is about 3860 CNY/ton, and the spot processing fee is only more than 400 yuan per ton, so the manufacturer is basically in a loss situation.

At present, PTA manufacturer's inventory is about 10 days, and polyester factory's raw material reserve is about 12 days. If the downstream market rework in the later stage is not as expected and the demand follow-up is insufficient, it will force PTA link to accelerate the accumulation of inventory. At that time, PTA processing fee will be compressed again, so that more manufacturers will be added to the list of production reduction. It is difficult for demand to recover. The problem of returning to work caused by the epidemic plagues the market. The more downstream the polyester industry chain is, the more sensitive it is to the epidemic. At present, the resumption time of major weaving enterprises is generally delayed after the middle of February. However, due to the 14 days isolation period after the return of the logistics restricted stacking workers, it is optimistic that the weaving enterprises will be normal in early March, and the production capacity in areas with severe epidemic will be restored later. The mismatching of polyester industrial chain during the Spring Festival has increased the inventory pressure in the upstream market, and this year's epidemic factors will directly reduce the demand for about one month.

In the case of delay of terminal construction, the amount of new polyester production capacity will be greatly reduced this year. It is understood that some polyester manufacturers have further increased production reduction due to insufficient auxiliary materials. Up to now, the polyester starting load has dropped below 60%. Even so, the inventory of various products is still increasing rapidly, and the expectation of polyester inventory is still obvious in the later stage, thus dragging down PTA inventory digestion. To sum up, under the influence of the current epidemic situation, hard core policies against the epidemic occurred frequently in various regions, and it is difficult to guarantee the return time of terminal enterprises. At the same time, the polyester plant is also continuously reducing the load, and PTA is faced with greater storage pressure in the later period. In the context of intensified supply-demand contradiction, PTA is expected to remain weak oscillation, and should not participate in the rebound.