In December, when crude oil prices fell sharply, the trend of PTA first declined and then rose, while the trend of ethylene glycol was obviously stronger. At this stage, many chemicals whose demand is mainly for the domestic market have diverged from the trend of crude oil prices. Many of them are affected by factors such as adjustments to domestic epidemic prevention and control policies and expected recovery in demand. However, when the market cools down, the market will return to normal. After the product fundamentals themselves, where should the products of the polyester industry chain go?
In December, PTA will switch to destocking, and PX profits are expected to transition to the PTA side.
Since November, the polyester end has begun to vigorously reduce production and load, and the comprehensive operating rate of polyester has dropped by 10 percentage points from 82%. Although the shrinkage of polyester filament supply has continued to this day, the extent of the load reduction has slowed down, and subsequent output is expected to There is not much room for downside. Due to the excessive intensity of this production reduction, which was gradually transmitted to the upstream raw material end, PTA maintenance volume increased significantly in the past month, with daily losses exceeding 70,000 tons, gradually approaching historical highs, and PTA operating rate fell by 6.5 percentage points to 66.8%. Due to the higher-than-expected maintenance volume, PTA is very likely to turn to destocking in December, and the previous expectation of accumulated inventory due to the start of production has been reversed.
As the PTA downstream of PX’s largest domestic demand has gradually reduced its load, the load last week fell to a new low since October, which has put considerable pressure on the PX end. It is expected that there will be no significant improvement in the supply of PX’s largest domestic demand in December. , the production of superimposed PX was relatively smooth, and the accumulation of PX in December intensified. Last week, affected by the expansion of declines in crude oil and naphtha, PX profits expanded 27% month-on-month to $294/ton. It is worth noting that the expansion of PX profits last week was entirely due to the decline in naphtha and crude oil prices, not from the improvement in inventory pressure on its own fundamentals, and there is already a mutual compression pattern between PX profits and PTA profits. Therefore, when PTA’s inventory pressure gradually shifts to the PX side, PX’s profits are expected to transition to PTA processing fees, and the PX trend appears weaker in December. To sum up, in the short term, PTA still maintains an oscillating trend, while the 05 contract is still bearish with a pessimistic attitude due to the approaching pressure to put into production.
The continued inventory accumulation pattern of ethylene glycol has not changed, but at the same time the valuation has been restored
As of December 12, the total inventory of major ports in East China was 946,700 tons, an increase of 49,000 tons from the previous statistical period. Currently, the inventory of ethylene glycol ports is at an absolutely high level, even exceeding the same period in 2020. The continuous load reduction at the polyester end has suppressed the purchasing mentality, the shipment volume continues to decline, and the port stagnation phenomenon is serious. However, while port inventories remain high, ethylene glycol production is still progressing smoothly, which has put a certain amount of pressure on the supply side. As of now, the 600,000-ton unit of each of the three lines of Shaanxi Coal and Yulin has been put into operation. The 2-million-ton unit of Shenghong Petrochemical will be put into operation in early December. The 800,000-ton ethylene glycol unit of Hainan Refining and Chemical Co., Ltd. is expected to be put into operation at the end of December. The supply of existing equipment continues to increase. The 300,000-ton ethylene glycol plant in Tongliao, Inner Mongolia, began to shut down on December 1 and plans to restart on December 15. Products will be available around the weekend.
Recently, the valuation of ethylene glycol has been significantly restored due to the period of moving positions and replacing stocks. Among them, methanol-to-ethylene glycol and integrated profit recovery are the most optimistic, providing another driving force for the comprehensive operating rate of ethylene glycol. It is not difficult to see that the recent price trends of ethylene glycol and crude oil with olefin properties have been seriously divergent. The several rebounds of ethylene glycol were not only boosted by the price increase of light naphtha, but also affected by the expected rebound in domestic demand. Chemicals whose demand is mainly in the domestic market have tasted the benefits of this “chaotic period”, but after returning to the fundamentals of ethylene glycol, it can be seen that this rebound is not very sustainable, so ethylene glycol is in In the pattern of continuous accumulation of reserves, there is still no obvious upward drive.
Polyester inventories have finally shown depletion, but are still at high levels
After nearly two months of production and load reduction, polyester has finally seen a glimmer of light. Filament stocks have maintained a destocking pattern for two consecutive weeks, but the current inventory is still at a high level. The main reason for the gradual improvement in spot production and sales is the expected rebound in consumption brought about by the optimization of epidemic prevention and control policies, but the recovery of actual consumption still takes time. In the early stage, due to disturbances on the raw material side, PTA in particular was dragged down by the drop in crude oil prices, while polyester prices were more resilient than upstream raw material prices, resulting in an overall rebound in spot processing fees. However, as the Spring Festival is approaching, companies need to withdraw funds. In the environment of early factory holidays and lack of orders, even if the recovery of cash flow levels is optimistic, it is unlikely that polyester will increase its burden in the future. We must continue to pay attention to the company in the future. The time point when finished goods inventory is reduced to a reasonable level. To sum up, the overall performance of polyester is still a weak oscillation. Without a significant increase in the start-up, there is no positive demand for the upstream raw materials PTA and ethylene glycol.