Market Profile
Opinion Strategy
Crude oil prices rose steadily last week. Hanbang’s 2.2 million tons of production capacity was suspended for maintenance due to cash flow problems, and it was planned to be suspended for 2 weeks. Driven by this, PTA rose. It once formed a breakthrough pattern and then fell back. The main contract is currently hovering around 3640. The overhaul of Hanbang’s 2.2 million tons unit has shifted PTA supply and demand from balance to slight destocking, but the problem of high inventory still exists. In the later period, on the one hand, Hengli’s new equipment will be put into operation, and on the other hand, the PTA equipment will also undergo seasonal maintenance. The subsequent inventory accumulation or destocking will depend on the commissioning of the new equipment and the performance of the maintenance. In the current environment of high PTA processing fees, there is a strong incentive to postpone maintenance of PTA equipment. For example, Hainan Yisheng’s planned maintenance in early June has been postponed. If the maintenance efforts are not enough and the new equipment is put into production, PTA’s rebound strength may be limited.
In terms of MEG, the processing price difference of oil-based MEG is acceptable, while the profit of coal-based MEG is relatively poor, resulting in some losses. As of now, the overall MEG operation rate is 53.13%, of which 37.22% is coal-based production. There are many domestic production capacity suspensions and inspections, and port inventories are still in the accumulation channel.
The situation at the polyester end has improved, product inventory is at a low level, and profits are acceptable. The order volume of industry chain terminals in May has improved compared with April. The improvement comes from the initial delivery of previously delayed deliveries, and the other part comes from the marginal improvement in terminal consumption. However, although there has been an improvement, there is still a large gap compared with last year. As overseas businesses gradually resume work and production, overseas inquiries are gradually increasing, but it will take a long time for full recovery.
Strategic suggestions
Continue to hold short orders and wait and see without orders (for reference only)
Main risk points
1. The progress of the epidemic has triggered a sharp decline in downstream demand, which will compress raw material profits upward.
2. OPEC+’s ineffective implementation of production cuts has triggered a further collapse of the center of gravity of crude oil prices.
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