PTA Inventory will Reach A New High in the Second Quarter

On the afternoon of April 9, before the OPEC + crude oil meeting, the PTA market was splashed with cold water at the risk of being attacked by the surge in crude oil. At the beginning of April, major oil producing countries released the news that they may cooperate to reduce production. WTI crude oil rebounded to 29.13 US dollars / ton, the highest increase to 45%, from 20.1 US dollars / barrel at the end of March 31.

The violent rebound of crude oil has obviously boosted the PTA industry chain market, and the market speculative underpricing and replenishment market has appeared, even some foreign capital has entered the market to copy polyester products. From April 2 to April 4, the average daily production and sales of polyester filament in East China was 290%, while that in March was only 55%.

On April 2 and 3, a large PTA matchmaker in East China had an average daily trading volume of about 130000 tons, while its average daily trading volume in March was about 23000 tons. Trading volume of PTA and polyester products, especially the smooth transfer of inventory of polyester products, is not a substantial improvement in the demand of the industrial chain, but a "false prosperity" of speculative bottoming under the expectation of crude oil production reduction.

As for the OPEC + crude oil conference, it is believed that the current global crude oil demand has declined and the crude oil storage pressure has increased significantly. It is speculated that the oil producing countries may reach an agreement on crude oil production reduction, but the production reduction may not be as strong as the market, and the market has overdrawn the advantages of crude oil production reduction in advance, and the subsequent crude oil surge is not large. In particular, under the premise of the aggravation of the epidemic in Europe and the United States, the major European and American economies except China are in a state of economic stagnation, which will partially offset the good effects of the reduction of crude oil production. With the restrictions on travel in European and American countries, European and American clothing stores are mostly closed, and the pressure on China's textile and clothing exports will continue to increase. China's textile exports will miss the European and American spring sales season.

From January to February 2020, China's textile and clothing exports reached US $29.835 billion, down 20.0% year-on-year, while the global epidemic increased from March to April. It is speculated that China's textile and clothing exports will decline by a larger margin from March to April.

The starting load of China's looms once picked up to 70% in the middle and late March, but dropped to about 55% in the early April, the peak season was not strong, and the terminal demand of the industrial chain was low. At the beginning of April, the high production and sales of polyester overdraw the demand of the future market. Speculators and terminal factories need time to digest polyester inventory. According to the processing fee of 550 CNY/ton, the average daily profit and loss of PTA is 26 CNY/ton in March and 179 CNY/ton in April (as of April 9). PTA production profit, domestic PTA plant high start. In addition to the 6.2 million T / a long-term shutdown and production capacity, at present, there are only 700000 T / A in Hanbang, 600000 T / A in Jialong, 900000 T / A in Pengwei and 1.2 million T / A in Zhongtai. According to the current PTA starting load of 81.4% and 80.5% in polyester, the PTA surplus is 17000 T / d. In recent days, the starting load of 2.5 million tons / year of Hengli phase 4 will be increased from 50% to 100%, and the PTA plant of China Thailand 1.2 million tons / year is planned to restart. In mid April, the starting load of PTA will rise to 85.6%. If 80.5% of the starting load of polyester is maintained in the same period, the theoretical surplus of PTA will be 24000 tons / day. On the premise that PTA production is profitable in the second quarter and Hengli's PTA cost advantage is superior to the peers, Hengli's new PTA production capacity of 2.5 million tons / year in the fifth phase is expected, and the author expects that PTA social inventory will continue to reach a new high in the second quarter.

The speculative market that lacks the terminal demand of the industrial chain is hard to sustain. In the second quarter, all countries will issue various favorable policies, hoping that the epidemic situation in Europe and the United States will be controlled as soon as possible and the production of oil producing countries will be greatly reduced. We hope that the terminal demand of the industrial chain will rise steadily.