Perhaps July and August overdrafted the polyester market demand in September. In September, the peak season for polyester market demand was not strong. Downstream polyester factories reduced prices for promotion, and rigid demand for PTA declined.
PTA after skyrocketing
Since the second half of last year, driven by the increase in crude oil prices, the price of PTA has also risen all the way, but its increase has always been weaker than that of the upstream PX, and most of the industry`s profit margin remains in PX. This situation changed in July this year. Taking advantage of the rapid depreciation of the RMB, the market expects that PTA will continue to destock in the second half of the year and the PTA production capacity will increase by 10+ points in the next year. PTA price and PX price difference Both rose rapidly. Of course, due to the short-term PTA price surge, it has brought tremendous pressure on the production cost of downstream polyester filaments, and it is difficult to form a good transmission. It can be said that the rise has lost the fundamental support, and there has been a hint of a callback. The author believes that due to the high price of crude oil and the market’s judgment on the supply and demand of PTA in the next year, the callback is mainly to benefit the downstream polyester filament, and the amplitude should be within 10%. After the downstream gradually shifts the impact of the increase in cost. , PTA prices may even rebound.
At this stage, major PTA manufacturers are still repurchasing PTA spot at a high price. The receipt of PTA major manufacturers is the only good thing in the current market. As of September 13, the average spot price of PTA in September was around 9,290 yuan/ton, and the PTA factory locked the spot price in September at a seven-year high. Even if downstream factories in the second half of September conflict with the high spot price of PTA and cause the PTA price to fall, according to the current start-up load of about 87% of downstream polyester, the decline in PTA spot will be limited. It is speculated that the average PTA spot price in September will be higher, and PTA settlement will be settled in September. Prices will also be at a multi-year high.
The downstream of shrinking profits
The growth of demand for polyester filament, the main downstream product of PTA, is relatively stable, basically maintaining above 5% per year, and there is always a long-term rigid growth demand for raw materials. Since it is currently in the peak season, Q3 is normally the annual demand high, and Q4 will still maintain good demand. Even from the past two years, the demand for Q4 is no less than that of Q3. But entering September, the industry`s gold, nine, and silver, ten positions have not yet appeared.
The production and sales of polyester yarns in September were the lowest in the year, even lower than February when the Spring Festival was held. Mainly due to the overdraft of September market demand from July to August, the terminal weaving factory was unable to smoothly pass on the cost pressure caused by the early PTA and polyester surge, and the enthusiasm for polyester filament procurement was not high, and the loom load dropped to 66% in mid-September. Around this time, the demand for polyester filaments has declined. In mid-September, polyester filament factories started to cut prices for promotion, but the price cuts increased the market`s fear of falling, or it was difficult to substantially boost the demand for polyester filaments.
In the survey of the two largest polyester filament companies in the country, Tongkun and Xinfengming, it is learned that due to strong terminal demand, polyester filament companies are not unacceptable to the price increase of PTA, mainly because they cannot The skyrocketing price of raw materials is transmitted to the downstream. If the price cycle is extended, it can actually be digested relatively smoothly.
External macro factors
China`s textile exports to the U.S. account for 17% of total textile exports. Among the US$200 billion additional 10% tariff items announced by the U.S., there are about 1,000 textile and apparel items, involving most textile raw materials, semi-finished products and a small amount of clothing accessories. Products, which are more related to polyester. In the short term, it seems that it will suppress the demand for polyester, which will affect the end demand of the entire industry chain. However, in fact, through re-export trade and transfer of production capacity to Southeast Asia, the final impact may only be some marginal changes in the growth rate of demand. Does not affect the overall supply and demand pattern.
Conclusion
In the long run, with the next year as the observation period, international oil prices will remain high, and the time for large PX production capacity will be delayed. PTA will only have a small increase in production capacity such as Xinfengming’s 2.2 million tons/year, and the demand for polyester filaments will remain strong. The real impact of the trade war on the terminal is relatively small.
In the short term, we are concerned about whether major PTA manufacturers continue to receive high prices. The downstream polyester factories have poor production and sales, and terminal weaving factories are complaining. Zhongyu Information expects that the short-term PTA market will fall within a narrow range.
Post time: Jun-03-2019