On the afternoon of April 9, before the OPEC+ crude oil meeting, I risked being slapped in the face by the sharp rise in crude oil and poured cold water on the PTA market.
In early April, major oil-producing countries released news that they may cooperate in reducing production. WTI crude oil closed at US$20.1 per barrel from March 31. It once rebounded to the intraday high of US$29.13/ton on April 3, with the maximum increase reaching 45%. The violent rebound of crude oil has significantly boosted the PTA industry chain market. Speculative bargain hunting and restocking appeared in the market, and some OTC funds even entered the market to bargain dip in polyester products. From April 2 to April 4, the average daily production and sales of polyester filament in East China was 290%, while the average monthly production and sales in March was only 55%. On April 2 and 3, the average daily PTA spot trading volume of a large PTA broker in East China was about 130,000 tons, while its monthly average daily trading volume in March was about 23,000 tons. The transaction volume of PTA and polyester products increased, especially the smooth transfer of inventory of polyester products. However, this is not a substantial improvement in demand in the industrial chain, but a “false prosperity” caused by speculation and bargain hunting in anticipation of crude oil production cuts.
Regarding the much-anticipated OPEC+ crude oil meeting, Zhongyu Information Anguang believes that global crude oil demand is currently declining and crude oil storage pressure is greatly increased. It is speculated that oil-producing countries are likely to reach an agreement to reduce crude oil production, but the intensity of the production reduction may not be as strong as the market. , and the market has already overdrawn the benefits of crude oil production cuts in advance, and the subsequent rise in crude oil will not be large. Especially as the epidemic in Europe and the United States worsens, the world’s major European and American economies, excluding China, are in a state of economic shutdown, which will partially offset the benefits of crude oil production reductions.
As European and American countries restrict outdoor travel, most European and American clothing stores are closed, and the pressure on my country’s textile and clothing exports will continue to increase. big. my country’s textile exports will miss the spring market in Europe and the United States. From January to February 2020, my country’s textile and clothing exports were US$29.835 billion, a year-on-year decrease of 20.0%. However, the global epidemic intensified from March to April. Zhongyu Information predicts that my country’s textile and clothing exports will have a larger increase from March to April. decline. my country’s loom operating load once rebounded to 70% in mid-to-late March, but dropped to around 55% in early April. The peak season was not prosperous, and end demand in the industrial chain was sluggish. The high production and sales of polyester in early April overdrawn the market demand, and speculators and terminal factories needed time to digest polyester stocks.
Zhongyu Information calculated based on the processing fee of 550 yuan/ton, PTA’s average daily profit and loss was an average monthly loss of 26 yuan/ton in March, Profit in April was 179 yuan/ton (as of April 9). PTA production is profitable, and domestic PTA factories are operating at a high rate. Excluding the 6.2 million tons/year long-term shutdown and production capacity changes, currently only Hanbang’s 700,000 tons/year, Jialong’s 600,000 tons/year, Pengwei’s 900,000 tons/year, and Zhongtai’s 1.2 million tons/year PTA units are shut down. According to the current operating load estimate of 81.4% for PTA and 80.5% for polyester, the PTA surplus is 17,000 tons/day. Recently, Hengli Phase 4’s 2.5 million tons/year operating load will increase from 50% to 100%, and Zhongtai’s 1.2 million tons/year PTA unit plans to restart. In mid-April, the PTA operating load will rise to 85.6%. If polyester maintains 80.5% in the same period At the starting load, the theoretical surplus of PTA is 24,000 tons/day. Under the premise that PTA production is profitable in the second quarter and Hengli PTA’s cost advantage over peers, Hengli’s fifth phase of 2.5 million tons/year new PTA production capacity is about to be released. Zhongyu Information predicts that PTA social inventory will continue to hit new highs in the second quarter.
The speculative market that lacks terminal demand in the industrial chain is difficult to sustain. In the second quarter, various countries will introduce various favorable policies. We hope that the epidemic in Europe and the United States will be controlled as soon as possible and that oil-producing countries will significantly reduce production. We hope that the terminal demand in the industrial chain will be stable. Come back, after all, you and I are both in this storm. </p
