PTA Oversupply Aggravates The Price Or Will Continue To Seek The Bottom

Recently, the trend of crude oil price is warmer, and PTA futures prices have slightly rebounded. In terms of devices, Fuhaichuang devices will produce qualified products, the market supply will increase, and the spot liquidity is good. The basis is also weakening. At the same time, the downstream polyester production and sales will continue to be weak. Therefore, we expect that PTA prices will continue to be weak without obvious positive news stimulation.

Cost side is difficult to become climate

On the cost side, the real contradiction in the oil market is still concentrated on demand. In the short term, oil prices are vulnerable to emergencies, including geopolitical issues. In the future, there will be a lot of complicated news. Macroscopic and fundamental interactions, including whether the Federal Reserve will cut interest rates and other major events, deserve continuous attention. Therefore, it is expected that oil prices will be dominated by range shocks in the short term.

In addition, because there are many new devices at home and abroad, there may be greater downward pressure on PX prices. Therefore, in the next one to two months, it is difficult for the cost side to become the driving force for the upward price of PTA.

The supply side is still tight

From the supply side, the overhaul of Fuhaichuang is nearing the end, and the overhaul of new devices will follow up under the sharp fall of PTA, but it depends on the implementation. Fuhai Chuang's 4.5 million ton/year PTA plant is planned to restart this weekend. Due to the sharp fall of PTA futures this week, many PTA enterprises have announced their overhaul plans from August to September, including Jiangyin Hanbang, Yizheng Chemical Fiber, Huabin Petrochemical, Hengli Petrochemical, Jialong Petrochemical, Honggang Petrochemical, etc.

However, as far as the new capacity is concerned, Hengli Petrochemical's 2.5 million ton/year PTA plant is scheduled to be put into production on October 20. The market was expected to not end in 2019. The production progress of the plant is ahead of schedule or affects the market mentality to some extent.

Weak demand side is hard to change

In terms of polyester demand, polyester manufacturers continued to reduce production. Last week, the start of production of polyester manufacturers fell by 1% to 85%; The operating rate of weaving machines in Jiangsu and Zhejiang provinces in the lower reaches decreased by 7 to 65%. And last week, due to the sharp drop in PTA spot, polyester manufacturers were cautious in stocking up, and downstream demand declined. Last Friday, the production and sales of polyester rose to 140-150%, and other times, the production and sales of polyester were basically sluggish, with the overall performance maintained at about 4-50%.

In terms of inventory, polyester production and sales continued to be depressed last week, polyester polyester continued to accumulate inventory, polyester chip inventory increased by 2.9 to 7.5 days, polyester short inventory increased by 2 to 6 days, polyester long FDY inventory increased by 1.5 to 13.5 days, polyester long DTY increased by 2 to 22 days, and polyester long POY increased by 1 to 8 days.

To sum up, due to good profits in the early stage, production enterprises resumed production in a large area, while terminal demand shrank, and the problem of PTA oversupply intensified. Although the PTA price has fallen sharply recently, it has not stimulated the production of manufacturers to reduce production and increase the purchase of terminals. The PTA price may continue to find the bottom, and in the short term, it may be weak. (Source: Baocheng Futures, Founder Middle)