Introduction: The recent fluctuations in PTA prices are mainly driven by the cost side. Due to the new output agreement reached by OPEC+, the commodity market has shifted to varying degrees, and PTA prices have moved up significantly. As of December 3, 2020, the WTI 01 contract was at US$45.64/barrel; the Brent 02 contract was at US$48.71/barrel. The main contract of China SC crude oil futures is 2101 to 288 yuan/barrel.
Market overview:
The PTA market has been in a stalemate recently. Because the OPEC+ meeting at the beginning of the week has not yet reached an agreement on extending the production reduction agreement, and the epidemic in Europe and the United States is still serious, international oil prices fell slightly. As the weekend approaches, OPEC+ has reached a new output agreement, which will increase daily crude oil production by 500,000 barrels per day starting from January next year. The compensation mechanism will be extended to the end of March and the production policy for next month will be evaluated in the same month. The monthly adjustment will be small. Over 500,000 barrels per day, which is not as good as expected but still brings positive support. As the vaccine progress is faster than market expectations, oil prices rebound. In terms of supply and demand, PTA’s own equipment is operating relatively stably, and with the restart of Yadong Petrochemical, supply has increased again; the downstream polyester end has remained stable without significant fluctuations, maintaining rigid support for PTA, but the supply and demand pattern continues to be loose. Therefore, the cost side is still the main driving force for PTA price fluctuations, while the supply and demand side of PTA continues to be loose, and it is difficult to see effective relief in the short term. As of December 3, the price of PTA was 3,305 yuan/ton, down 0.15% from the previous month.
Demand side: Recently, polyester maintenance and restart have coexisted. Huahong’s 500 tons/day unit that was overhauled in the early stage has restarted, but the 200,000 tons/year unit in Sanfangxiang has been overhauled, making domestic polyester Industry output fell slightly from last week, with weekly output of 1.112 million tons, down 0.19% from last week. Although the cost side of polyester has been slightly supported recently despite the loss of pre-spinning, the gradual weakening of terminal demand has dragged down the production and sales data of polyester filament factories. Factory prices are mostly stable and actual orders are mainly negotiated.
Market outlook:
Judging from the short-term supply and demand situation, PTA equipment will be installed next week There was no change, TA load increased further, and output is expected to be 1.0464 million tons next week. Downstream polyester also remains stable, with no device changes remaining stable, and the overall supply and demand pattern maintaining a slight accumulation of inventory.
Taken together, the contradiction between PTA supply and demand may gradually begin to become apparent, but there is still some positive support on the cost side. From the perspective of valuation, PTA prices are at a low level, and the downward space is expected to be relatively limited. It is difficult for crude oil to provide effective downward space without a collapse. Therefore, we believe that the market may be relatively volatile, with a shock range of 3100-3400 yuan/ton.
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