Introduction: PTA’s “Gold, Three, Silver and Four” market performance was optimistic in the first half of the year, with prices reaching new highs. However, as the upstream and downstream production capacity of the PTA industry chain continues to be concentrated and supply and demand increase, the terminal market has not seen significant improvement. Is the “Golden Nine and Silver Ten” market in the second half of the year worth looking forward to?
In the first half of 2023, the PTA market first rose and then fell. The main reason was that it was boosted by macroeconomic favorable conditions. The cost side drove PTA to strengthen. At the same time, it was supported by supply and demand fundamentals. The traditional peak season market of “gold, three, silver and four” did not disappoint the industry. During this period, PTA prices also hit a new high this year. In the first half of the year, the average spot price at the main port in East China was 5,798 yuan/ton. The highest price was 6,510 yuan/ton on April 17, and the lowest price was 5,280 yuan/ton on January 9.
Data source: Jin Lianchuang
It can be found from the trend chart that the trend of the PTA market in the first half of the year can be divided into four stages.
In the first stage, from January to February, PTA first rose and then weakened. International oil prices rose after New Year’s Day, and PTA prices rose simultaneously, boosted by positive costs. However, before the Spring Festival holiday, some terminal companies went on holiday early, and the decline in demand led to limited price increases. After the Spring Festival, due to the recovery of PTA operating rates, while downstream merchants The PTA market entered the market late, and the supply and demand situation was accumulated. At the same time, the cost side fell, and the PTA market fluctuated and weakened.
In the second stage, from mid-February to mid-April, industries gradually resumed work and production. Crude oil prices have strengthened as concerns about interest rate hikes have eased, and PTA prices have strengthened within a narrow range. As downstream polyester factories recover slowly, terminal orders have not improved significantly, and the market recovery has not been as good as expected, so the increase in PTA prices has been limited. In March, the tight spot supply of PTA was good for the market. PTA prices rose sharply. During the same period, the spot basis strengthened significantly, rising from an initial 35-40 yuan/ton to a maximum of 180 yuan/ton. Although the downstream polyester industry maintains high operating conditions and is in urgent demand, it supports the market. However, the main PTA factories continue to purchase spot goods, and some companies have tight spot liquidity. In addition, long funds have boosted the futures market, and PTA prices continue to rise. It hit a new high for the year in mid-April.
In the third stage, from mid-April to mid-May, PTA broke through and went down. After mid-April, the 05 contract on the futures market was moved to the 09 contract. There was an expectation of seasonal weakening in market demand, and the PTA market began to turn around and fall. After the May Day holiday, PTA’s new equipment was put into production and the maintenance equipment was restarted. After the supply increased, the main factories suspended buybacks, causing PTA to fall all the way. The basis fell most obviously. At the end of April, the basis for PTA spot trading was 09 yuan plus 550 yuan/ton. On May 19, the lowest trading basis for PTA spot remained at 185 yuan/ton.
In the fourth stage, from mid-May to mid-June, PTA maintained a wide range of fluctuations. Most of the time follows the fluctuation of oil prices. However, from the end of May to the beginning of June, PTA factory equipment was intensively overhauled, and the supply shrinkage boosted the market price to a certain extent. At the same time, the downstream polyester operating rate remained high, the rigid demand performance was optimistic, and the PTA market basis Strong drop resistance.
Taken together, PTA’s “Gold, Three, Silver and Four” market performance in the first half of the year was optimistic, with prices reaching new highs. However, as the upstream and downstream production capacity of the PTA industry chain continues to be concentrated and supply and demand increase, the terminal market has not seen significant improvement. Is the “Golden Nine and Silver Ten” market in the second half of the year worth looking forward to?
The main PTA factory still plans to put into production, and it is expected that the new PTA production capacity will be 12.7 million tons in the second half of the year.
Data source: Jin Lianchuang
There are still 12.7 million tons of new PTA devices planned to be put into production in the second half of 2023. Most of the upstream and downstream supporting devices are mainly used, so PTA supply pressure is heavy. However, under the combination of low processing fees and competition between brands and non-brands, the operating rate of some PTA companies may be passively compressed.
Multiple downstream polyester units are planned to be put into operation, with new production capacity reaching 6.05 million tons.
Data source: Jin Lianchuang
The seasonality of the polyester industry is still obvious, and May to August is still the off-season period for the industry. Although 6.05 million tons of new polyester production capacity will be put into operation in the second half of the year, it is far less than the start-up of new equipment for raw material PTA. In addition, the external demand for terminal textiles and apparel remains weak, and export orders are still under pressure. Orders in the second half of the year are mainly for thicker winter clothing, which may be better than the first half. The factory has some expectations for future orders, but the expectations are not high. If the Asian Games does not stop production and work, but there will still be concerns about dual control of energy consumption, there may be a need to stock up before the “Golden September and Silver Ten” peak seasons.
Jin Lianchuang believes that the domestic PTA market trend in the second half of 2023 may remain volatile and weak. Oil prices may show a volatile upward trend, providing solid support for PTA; in the second half of the year, new PTA equipment will be put into production more than the downstream polyester industry, so PTA supply is under greater pressure; in addition, the demand for downstream polyester and end-use textiles is increasing slowly, and various links in the industrial chain Inventories may remain high. The current PTA industry has formed an oligopoly market. After squeezing out high-cost devices, some form of price alliance cannot be ruled out. Therefore, the market may continue to have low processing fees in the second half of 2023, which is expected to be about 300-600 yuan/ tons attached��.
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