At the beginning of 2024, many PTA suppliers officially announced plans for equipment maintenance and load reduction, which has a significant boost to PTA. According to statistics, PTA has risen for 9 consecutive trading days. Specifically, the PTA East China spot market closed at 5,687 yuan/ton on January 11 and 5,909 yuan/ton on January 23, a unilateral increase of 3.9% in nine trading days. Looking at the PTA futures market, the main PTA contract (TA2405) closed at 5,828 yuan/ton on January 16 and 5,982 yuan/ton on January 23, rising by 2.64% for 5 consecutive trading days.
Reason for supply: Many suppliers officially announced equipment maintenance plans, which has a significant effect on boosting PTA
“This round of maintenance is mostly large-scale equipment. The total production capacity of the three equipments is 10.25 million tons per year, accounting for 13% of the country’s effective production capacity. In addition, the maintenance time is relatively long, usually 3-4 weeks (usually about two weeks). Although the specific duration of the technical transformation equipment has not been announced, the estimated time is not short.” said An Guang, PTA analyst at Zhuochuang Information.
“From a volume perspective, the production capacity involved in maintenance and technical transformation in the first quarter was 19.8 million tons/year, accounting for 24.6% of the total production capacity. If there are no other temporary changes, the monthly maintenance capacity involved will be 5 million to 7 million tons. /year, excluding the individual cases at the end of the COVID-19 epidemic in 2023, the overall maintenance intensity of this round is above the average.” said Xie Wen, leader of the energy and chemical group of Zhongda Futures.
Anguang introduced that the 3.75 million tons/year device in Northeast China has been in operation for 20 months, and the market had strong expectations for maintenance before; the 2 million tons/year device in Ningbo has been in operation for 11 months, and the market had no expectations for maintenance before; South China 450 The maintenance plan for the 10,000 tons/year device has been advanced from April to late March, which will have an early impact on the market.
“The release of such a large-scale centralized maintenance plan before the Spring Festival exceeded expectations.” Zhu Lihang said that in previous years, the PTA market was dominated by accumulated warehouses from January to February, but it is obviously different in 2024, with multiple large-scale equipment undergoing centralized maintenance to improve the supply side. The start-up situation of the demand-side polyester segment this year is also better than expected. Under the dual effects, the supply and demand pattern of the PTA market is good.
Reasons for demand: Polyester production starts to decline slowly, but is still higher than the same period in previous years
As the Spring Festival holiday approaches, the upstream and downstream maintenance of the industrial chain continues to increase, and the operating rate of downstream looms gradually decreases. According to statistics from Zhuochuang Information, the operating rate of polyester during the Spring Festival may remain above 80%, which is at a high level compared with previous years. In addition, some polyester products experienced pulsating high production and sales. At the same time, the partial improvement in foreign trade at the end of the year boosted industry confidence to a certain extent. As a result, downstream stocking willingness increased, and the support for PTA demand exceeded market expectations.
Reason for cost: The trend of international crude oil is relatively strong, which still provides support for PTA costs
In the near future, the extremely cold weather in the United States has led to a decline in crude oil production, and crude oil inventories have continued to be destocked, giving rise to oil prices. In addition, China has continued to release favorable policies, which has increased market expectations for oil demand, supporting the strong fluctuations in crude oil prices. . As of January 25, the settlement price of WTI futures was US$77.36 per barrel and the settlement price of BRENT futures was US$82.43 per barrel, rising to a nearly two-month high.
Cost support and demand support resonate, and PTA may continue to be strong in the early Spring Festival
The most direct impact of this round of intensive equipment maintenance on the PTA market is that the supply will shrink significantly from February to March, thereby reducing the expected accumulation of inventory in the first quarter, prompting the spot basis to strengthen, and ultimately driving PTA prices to test previous highs. In addition, this round of centralized maintenance also kicked off the maintenance of PTA equipment in 2024.
“The overhaul of large factories indirectly reflects the loose market supply, while backward production capacity faces dual pressures of cost and competition, and survival will be more difficult. The PTA link is accelerating the survival of the fittest.” Anguang said.
Intensive maintenance of equipment before the Spring Festival caused the basis to strengthen rapidly, and traders actively made inquiries to receive goods. Judging from the current progress and schedule of upstream and downstream maintenance, the PTA market will not face much pressure on accumulated storage in the short term. Coupled with the expected increase in oil adjustment, there is a higher probability that the contract in recent months will be stronger.