Since last Friday, in just two trading days, PTA futures have risen by nearly 500 yuan/ton, going from a sharp drop to a sharp rise, once again refreshing the industry’s perception. Yesterday at noon, the front-month contract of PTA futures even hit the daily limit. Why was there such an “abnormal movement”?
In fact, both the strengthening of spot basis and the sharp rise in futures prices are related to changes in the cost side. A reporter from Futures Daily learned that PXN, which exceeded expectations, may be able to explain this change in PTA’s recent trend.
PXN continues to expand, and the high point during the year may arrive early
According to the reporter’s understanding, PXN is the price difference between PX and naphtha. As of March 17, PXN has strengthened from around US$300/ton at the beginning of the month to US$416/ton, a 40% widening, the highest since October 10, 2022. new high. In the same period last year, PXN was only US$200/ton.
“The PXN indicator mainly reflects the profit changes of the upstream cost PX link of PTA in the PTA industry chain.” Liu Siqi, an analyst at Zijin Tianfeng Futures, said that under normal circumstances, PXN will strengthen when the PX supply and demand pattern improves, and PXN will strengthen when the supply and demand situation worsens. will be compressed. When the PXN spread continues to remain high, it means that the PX link has better profits, and the overall operating load of PX is expected to move up slightly.
“Judging from the historical operating rate and changes in PXN price spreads, PX units are mostly products of one link in the petrochemical products of integrated refineries. Refineries pay more attention to the comprehensive benefits of integration. The profit change of a single link has an impact on the overall refinery start-up. The adjustment has little impact, so PX construction starts are not greatly affected by PXN fluctuations, and changes in construction starts usually lag behind changes in PXN,” Liu Siqi said.
The reporter learned that since March, as Asian PX devices have gradually entered seasonal maintenance and some unplanned maintenance has increased, the PX supply and demand pattern has improved, the center of gravity of PXN prices has gradually moved upward, and the PXN price difference has significantly widened.
Judging from historical trends, in June 2022, the PXN price difference reached a record high of over 600 US dollars/ton. However, PXN is still expanding, and the market expects that the price difference high this year will arrive early.
“Last year’s increase in PXN was more due to the price pull brought about by changes in PX oil demand. This year is due to the decrease in PX supply and the disruption caused by the sharp drop in naphtha prices.” said Xie Wen, leader of the energy and chemical group of Zhongda Futures. .
In this regard, Liu Siqi also explained that the current expansion of PXN is mainly due to the structural improvement of supply and demand and the expectation of increased demand for aromatics oil adjustment in the second quarter. In March, CNOOC Huizhou started planned maintenance, Guangdong Petrochemical reduced its load slightly, Shenghong reduced its load unplanned to 70%, the restart of Hainan refining and chemical units was postponed, and many units entered planned maintenance in April. PX supply was stable from March to May. There is a marginal downward trend, PTA construction starts remain at a relatively high level, and PX balance expectations from April to May are relatively strong. In addition, April to May will enter the peak season for gasoline demand in North America, and the market has certain expectations for an increase in demand for aromatic oil blending.
“According to the maintenance plan, the PX load in Asia and China will continue to decrease in the future, and the overseas operating rate of PX dropped to around 68% in mid-April, and the domestic operating rate dropped to about 70%. If the PTA operating rate remains stable, PX will still remain stable before May. To judge the destocking.” Xie Wen said that in addition, naphtha prices fell more in March following the price of crude oil. The greater decline in crude oil prices is due to changes in macroeconomic interest rate expectations and the superposition of crude oil accumulation expectations. These two factors are difficult to change in the short term, and naphtha is still bearish in the future. “Short-term PXN remains high despite supply reductions and naphtha declines,” she said.
According to Huarui Information Information Manager Hao Shangkun, the current core of PXN’s strength is still the improvement in supply and demand of PX, and there are expectations of destocking in the future. Of course, there are other factors, such as low PX social inventory, less pressure on the polyester industry chain compared with the same period last year, strong PTA price trends, good PX trading atmosphere, unexpected production reductions and load reductions in individual large devices, and MX due to expected oil adjustment demand. The price of toluene is also high. The market is doing some anticipatory transactions in advance, and it is very possible that PXN will reach its high point in advance.
Processing profits begin to shift to the PX link
Interviewees generally believe that PX is still in a relatively more active position in the polyester industry chain. “Under the background of comprehensive consideration of economics in refineries, the operating rate of PX is affected by multiple factors. Although more new production capacity has been put into operation, the current benefits in the industry chain are still more likely to be concentrated in the PX link.” Hao Shangkun said.
In this regard, Zhang Yongge, an analyst at Hongye Futures, said that after PTA experienced concentrated production reductions at the end of February, the efficiency of manufacturers has improved significantly. In mid-March, the dynamic processing fee for spot goods reached 500 yuan/ton, which greatly increased the willingness of enterprises to start production. Among them, Yishenglian’s 6 million tons load was increased, Hengli No. 1 unit’s original planned maintenance was shortened from one month to two weeks and then restarted, Fuhaichuang, which had been operating with reduced load for three months, also increased its load, and the PTA phased operating rate It rose to 81%, the highest level in the past year.
However, the PX market has gradually entered the traditional maintenance season. Recently, domestic and foreign devices have entered maintenance status. Due to the mismatch between PX and PTA, market processing profits have begun to shift to the PX link.
In addition, domestic sales orders in the terminal market improved in early March, and polyester filament stocks improved to a certain extent against the background of increased downstream procurement.
“The current inventory is neutral, and the overall production of polyester is at a high level of 90%. Although profits are not good, there is currently no expectation of significant production reduction. This time, the price of the PTA industry chain has moved upward from top to bottom, and the front-end market has greater pricing power.”��To a certain extent, more industrial chain profits can be obtained. “Zhang Yongge said.
PXN has strengthened significantly, and cost support has brought the price focus of downstream products PTA and short fiber upwards. In Zhang Yongge’s view, the strength of PX has raised the prices of PTA and downstream polyester products to a certain extent. In the short term, PX may have some support due to intensive maintenance, while PXN may oscillate strongly. However, PTA and polyester products have poor profits, and the sustainability of terminal orders needs to be further confirmed. There is a possibility of marginal weakening of demand in the later period, and there is greater pressure for PXN to continue to rise sharply. At the same time, with the PX maintenance peak in mid-April passing and the production capacity of Daxie Petrochemical being released, the tight PX supply situation will be eased.
Similarly, in Hao Shangkun’s view, PXN priced above US$400/ton is already facing certain pressure, and it will be necessary to see whether there will be negative feedback pressure on the demand side in the future. For example, if PTA and polyester are currently losing money, will they reduce production and load and lower the demand for PX?
“Whether PXN can expand, we should not only pay attention to whether there are unexpected shutdowns of the equipment, but also whether the future demand for refined oil will further improve, driving up the prices of MX, toluene and other products.” Hao Shangkun believes that in the future, there may be the possibility of transferring the benefits of PX to downstream performance, but at the expense of load downstream.
Xie Wen said that the current cost side has boosted the price of PTA. The supply of PTA spot and circulated goods is tight. In addition, the PTA equipment has been unexpectedly stopped, and the basis difference has continued to rise. At the same time, the polyester production capacity maintained a high load, and although the PTA production capacity increased, overall destocking was still maintained. “Because the maintenance of the PTA device in April is still unclear, if the polyester load still fluctuates around 89%, supply and demand in April may gradually shift from the previous destocking to a tight balance.” She said.
“The fundamentals of PX and PTA remain strong, but the PTA-Brent spread is already at a high level. The market still has certain concerns about the macro liquidity crisis. The absolute price of PTA is affected by the macro and cost of crude oil under the high valuation. It’s too big, so we need to pay attention to macroeconomic sentiment.” Liu Siqi said.
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