At present, the main PTA contract has moved to 2301. Compared with the strong rebound performance of the 2209 contract in the recent month, the overall price of the far-month contract is relatively weak.

Summary

In early August, after the price of the polyester industry chain rebounded, it showed a downward trend again. At present, the main PTA contract has moved to 2301. Compared with the strong rebound performance of the 2209 contract in the recent month, the overall price of the far-month contract is relatively weak. The main reason is that the domestic PTA start-up load dropped sharply from July to August, and there were many maintenance and shutdown devices, and the spot stock in the market was tight, which led to the spot basis and the continuous strengthening of prices in recent months.

As crude oil prices weaken again at the cost side, PTA and polyester prices fell under pressure. The production and sales of downstream polyester factories are not strong, and the factory starts to work at a low level after production cuts, and the load increase in the off-season is limited. In terms of inventory, PTA continues to destock, and MEG ports slightly destock. Overall, polyester consumption remained weak during the off-season, and PTA prices are expected to remain under pressure.

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1 PTA is strong near and far weak, the main force moves positions and changes monthly

In early August, the main PTA contract gradually moved positions from 2209 to 2301 contract. Compared with the stronger rebound performance of the 2209 contract in the recent month, the overall price of the 2301 contract in the long month is weak, and the TA9-1 price difference remains at around 400 yuan. The main reason for the strongest PTA in recent months is that the domestic PTA start-up load dropped sharply from July to August, and there were many maintenance and shutdown devices, and the spot stock in the market was tight, which led to the continued strengthening of the spot basis and prices in recent months. On August 16, the spot quotation in East China was around 6270, with a premium of futures 09 contract of about 330 yuan, and a premium of more than 700 yuan for PTA2301 main contract, with a spot basis set to a high level in the past three years.

Recently, although the spot price of PTA is relatively low in circulation, it supports PTA in recent months, under macro pressure, crude oil prices rebounded and fell again, driving the price of PX on the cost side, which significantly weakened the support on PTA. The impact of cost factors exceeds the impact of insufficient supply, driving the price of PTA and polyester to weaken again. At present, in the polyester industry chain, PTA and short fiber rebounded significantly in the previous period and turned to a decline, while ethylene glycol has been fluctuating in the bottom range due to oversupply pressure, and is currently continuing to decline under heavy cost pressure.

2 PTA start load is low, processing fees have been repaired

In the first half of 2022, the monthly start load of domestic PTA is generally not high. Construction started slightly in July in the third quarter, but with the impact of the suspension of maintenance and production of large PTA factories, in early August, the daily PTA operation rate only remained at a low level of less than 70% for most of the time. The main reason is still that there is insufficient consumption orders in the off-season. After the downstream polyester factories jointly reduced production, demand performance continued to be weak, and large PTA factories also concentrated on maintenance and reduced load, which brought about a tight spot supply situation in the short term.

August 16, the daily operating rate of domestic PTA was around 68.10%. The main reason is that from July to August, PTA has many maintenance devices, low production capacity operation rate, and combined with the expectation of polyester consumption demand, the spot price of PTA is in a state of supply and demand, and the spot basis of PTA is strong. In the future, Zhuhai Yinix's 1.25 million-ton PTA device is planned to restart, and Baihong's 2.5 million-ton device will return to full load, but Yisheng Ningbo's 2 million-ton device is expected to be difficult to restart in August, and the increase in PTA supply may be limited. The short-term supply and demand structure is slightly mismatched, bringing strong support for spot prices. TA09's recent month contract also performed relatively strongly, showing a pattern of strong near and weak far.

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8 August, the crude oil market rebounded briefly and then fell again, driving the price of PX on the cost side to fall, and the cost support for PTA was significantly weakened. As PTA maintenance has decreased after the negative pressure, demand for PX weakened, the PX decline was greater than that of PTA during the decline, which also brought about a rapid repair of PTA processing fees. Last week, the average processing fee of PTA was about 545 yuan/ton, an increase of 6.65% on a weekly basis. As of August 15, PTA processing fees have quickly rebounded to more than 700 yuan/ton. The rebound in industry processing profits will promote enterprises to enhance production and increase load, and will also alleviate the mismatch between spot supply and demand of PTA in the short term.

Since the start of PTAs in China this year is generally not high, PTAs have continuous destocking in August. As of August 11, domestic PTA had a weekly social inventory of 2.11 million tons, continuing the destocking state. Against the off-season background, PTA's continuous destocking also brings strong support for prices in recent months. With the subsequent restart and load lift of the PTA device, the destocking of the PTA may be interrupted. Before the downstream polyester demand rebounds significantly, the PTA may turn to the base storage state again.

3 Polyester production and sales are insufficient, and construction is at a low level.

This year, due to insufficient consumption of textile and clothing, hot weather and power restrictions, the starting rate of polyester terminal looms has remained at a low level in the same period in the past 10 years. Polyester factories jointly reduced production and reduced loads in May and July respectively this year to cope with weak consumer demand.

In mid-August, the domestic polyester start-up load only maintained to 77.8%, and the weaving start-up load has dropped sharply to 47.91%. Among them, the water jet loom in Wujiang area is 55.05%; the water jet in Changxing area is 47.25%, while the big round machine in Xiaoshao area is only 38.99%, the loom load of warp knitting factory in Haining area is 46.15%, and the warp knitting factory in Changshu area is 40.23%.

At present, due to the low season for textile and clothing consumption, most of the large polyester factories maintain production cuts. The impact of changes in the start-up of some small polyester devices is limited, and the overall start-up rate of polyester is difficult to significantly increase. The factories generally have low intentions for spot purchase of raw material PTA. In terms of filaments, the probability of rebounding in Xiao Shao, Ningbo and other regions has declined, and the weakening demand has led to the weakening of the market price of polyester filaments. In terms of staple fiber, the price is being consolidated at a low level, the downstream yarn inventory continues to increase, the enthusiasm for purchasing staple fibers has weakened, and the inventory of staple fiber factories has also gradually accumulated. We will follow up on the time node for downstream textile and clothing orders to usher in an improvement, which will bring strong impetus to the polyester and weaving lift loads.

4 Conclusion

From the perspective of the polyester industry chain, the upstream raw materials PTA and MEG of the industry are under pressure driven by weakening crude oil costs. PTA has a short-term strong price due to the reduction in maintenance and negative maintenance, but downstream polyester factories still maintain a low-load operating state, and consumer orders are unlikely to improve significantly under the off-season background. Therefore, it is difficult to have too strong performance on the side of the polyester raw material. In the future, with the increase in domestic device load, the price of PTA will still be mainly operated under pressure.

Risk warning:

1. The epidemic at home and abroad once again interferes with the pace of economic recovery;

2. High temperature weather continues to affect the increase in the start-up load.

This article is derived from Shenyin Wanguo Futures Macro Finance Research