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Industry Concern | Downstream production and sales have picked up. How will the PTA outlook be interpreted?

Update:07-01-2020
Summary:

At present, the PTA plant is operating at a high level, […]

At present, the PTA plant is operating at a high level, ample supply of inventory is accumulated, and market sentiment is affected by the macro environment, which is frequently negative.

However, recently, due to the improvement in downstream polyester production and sales, PTA has changed the past decline and the market price has risen. The market is highly suspicious of this rebound. So how will the PTA market be interpreted at this stage?

Relatively optimistic upstream performance

At present, the CFR China PX price is $ 870 / ton, which has fallen by $ 130 / ton in just one month. The era of big refinery is coming, PTA production enterprises with strong discourse power are stepping up the construction of PX devices.

For a long time, the profitability of the industry from PX to PTA to polyester has been concentrated on the PX end. The top-heavy pattern has been changed in 2019 due to the impact of PX production capacity. From the perspective of the price difference, the current price difference between PX and naphtha is hovering at a low level of 300 US dollars / ton, which is difficult to fall. At the same time, in the early stage of the PX plant's commissioning, the financial costs were high, and the company obviously did not want the PX price to fall too quickly. Therefore, the upstream continues to have limited profit space, and it is unlikely that PX will fall further.

High utilization rate

As of last week, the average operating rate of PTA was 86.4%, an increase of 1.6 percentage points from the previous period. In terms of equipment, Sichuan Nengtou Chemical's PTA plant was put into trial operation. Shanghai Petrochemical's 400,000 tons and Pengwei Petrochemical's 900,000 tons of PTA units were shut down for maintenance. PTA manufacturers' inventory was about 4 days.

High downstream demand or unsustainable

At present, the market mentality is still cautious. At the end of May, the inventory of terminal grey fabrics is about 40 days, and the pressure on destocking of grey fabrics is greater.

The operating load of the loom is reduced to about 75%. If the destocking of the gray fabric is not smooth, the operating load of the loom will continue to decrease. Terminal plants need time to digest polyester filament inventory after periodic replenishment. The lack of sustainability in the market is good to support high production and sales of polyester filaments. It is speculated that the production and sales of polyester filaments will enter a downturn period from the end of May to early June. The market is cautious and generally dislikes the sustainability of high production and sales of polyester filament.

Generally speaking, the terminal demand is not good, and it takes more time for polyester companies to recover their profits. This is transmitted to the PTA disk, which is reflected in the lack of upward momentum in prices. Although downstream polyester yarn production and sales have rebounded, it may be short-lived. Concussion.

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