[Introduction] From a fundamental point of view, the PTA equipment is operating stably during the Spring Festival, and the production capacity operation rate is at a high level during the year. After the holiday, a large amount of PTA supplies arrive at the port. The market feedback is that the supply of goods at the port terminal is sufficient, but the recovery of downstream polyester production will take time to superimpose before the holiday. Polyester factories have sufficient stocks, and polyester factories have low intention to receive goods after the holiday. As a result, the fundamentals of PTA after the holiday are difficult to say optimistic. However, the market has expectations for weak fundamentals and has a cost-side impact. The PTA market is still strong after the holiday. It is expected that PTA market will enter the downward channel.
Reason for supply: PTA inventory accumulates after the holidays, but the market has already expected this
The PTA production capacity operation rate is generally stable around the Spring Festival in 2024. As of February 28, the PTA production capacity operation rate was 82.5%, down 0.23% from before the holiday (the PTA production capacity operation rate was 82.73% on February 8). Due to the shutdown and restart of large-scale PTA equipment The costs incurred are relatively high, so manufacturers are cautious about shutting down PTA devices. Secondly, due to the recent fluctuation of PTA processing fees in the range of 400-500 yuan/ton, coupled with the physical properties of PTA that is easy to store, there are no unplanned PTA equipment shutdowns for maintenance during the Spring Festival, and normal production is basically maintained, resulting in the accumulation of PTA inventory after the holiday. A large amount of supply is concentrated in port terminals, which weakens the basis of spot supply. However, there are expectations for sufficient supply of PTA supplies before the holiday, and the overall impact is limited.
Reasons for demand: Polyester demand rebounded after the holidays, indirectly benefiting the PTA market
After the Spring Festival, the downstream polyester industry has gradually resumed operations. It is expected that most of the polyester plants that have reduced production and stopped operations will return to normal in early March. However, in the terminal weaving industry, since workers have not returned after the holiday, the recovery time of the industry will be relatively slower than that of the polyester industry. It is expected that the start-up of the industry will resume. The rate may not return to normal until March. Although polyester production starts are gradually increasing, the market is optimistic about the improvement of PTA market demand.
Cost reasons: International crude oil futures prices have risen, increasing support for PTA costs
The market weighs crude oil supply risks related to tensions in the Middle East and energy demand prospects. European and American crude oil futures rose for several consecutive trading days during the Spring Festival. Brent returned to fluctuating around US$80/barrel, which increased support for PTA costs and directly led to PTA There was a significant increase on the first trading day after the resumption of work after the holiday.
Expectation: Supply pressure may gradually increase, and PTA will still mainly fall in the long term.
Reasons for supply: New production capacity is about to be put into operation, and supply pressure may continue to increase.
According to the existing PTA device maintenance plan, two sets of PTA devices in South China with a total of 5.75 million tons are planned to be overhauled in late March. Overall, the maintenance intensity is not large. However, according to the current progress of new production capacity, Yizheng Chemical Fiber 3 million tons, Ningbo Taihua’s 1.5 million tons of new PTA production capacity may be put into operation in March, and the subsequent commissioning of 4.5 million tons of new PTA production capacity may further increase the pressure of oversupply of PTA, especially in Ningbo, which may further increase the pressure of oversupply, which is negative for the PTA market.
Cost reasons: International crude oil may undergo a weak adjustment, which will weaken the support for PTA costs.
The expected timing of macro interest rate cuts has been postponed, so macro pressures still exist. At the same time, OPEC+ production cuts in the second quarter are currently unclear. The market is worried that supply-side production cuts will not be as expected, and oil prices may undergo a weak adjustment, which will weaken the support for PTA costs.
To sum up, the increase in supply pressure resonates with the weakening of cost support. In the long term, PTA will still mainly fall.
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