Weak demand, be wary of PTA prices falling sharply

Since the beginning of the month, due to the impact of typhoon weather, logistics has been hindered, spot circulation has been sluggish, and many sets of equipment in East China ha…

Since the beginning of the month, due to the impact of typhoon weather, logistics has been hindered, spot circulation has been sluggish, and many sets of equipment in East China have been reduced due to maintenance and supply and demand have continued to destock. The PTA spot market price has soared to 6,700 yuan/ton, and continues to remain strong, while futures spot prices have continued to rise. The basis was once sharply raised to +1,000 yuan/ton, and PTA processing fees improved significantly. However, the overall market trading situation was still light, and polyester factories still had to submit orders.

From the cost side, since the beginning of the month, the market has intensified concerns about high inflation and interest rate hikes suppressing fuel demand, as well as China’s escalation of epidemic prevention measures. The market believes that OPEC+’s production cut of 100,000 barrels per day is only symbolic and will not support oil prices. The economic recession Concerns about weakening fuel demand have regained the upper hand, international oil prices have plummeted, and then the negative impact of a large increase in EIA crude oil inventories was offset by a decline in SPR inventories. Putin threatened to freeze oil and gas supplies to Europe in retaliation for price-limiting sanctions. The Iran nuclear deal encountered obstacles, and oil supply uncertainty The U.S. dollar has continued to weaken, international oil prices have risen, and the overall crude oil market has fluctuated widely since the beginning of the month. European and American crude oil futures have surged after an overall sharp decline, which has provided general support to the PTA market. From the perspective of direct raw material PX, the short-term PX market is still in a tight supply state, but the overall market trading atmosphere is not good. We are waiting for the release of new production capacity to provide next guidance. Asian PX prices have been adjusted in multiple ranges, which has slightly supported the PTA market. Weakness.

From the perspective of PTA’s own supply and demand, the overall restart and recovery of PTA coexist with maintenance in the short term, but the operating load remains low, the overall market supply increase is limited, and due to the accelerated movement of Typhoon Meihua and poor logistics, there are concerns about the spot circulation of the main port in the later period. , superimposed on short-term futures delivery, and oversold suppliers and traders actively inquired in the early stage, causing the PTA spot spread to strengthen significantly and the market price to rise.

From the perspective of downstream demand, with the end of power cuts and the seasonal peak season for terminals, polyester production has increased since September, and the demand for PTA has increased slightly. However, although the terminal textile load has increased, the overall domestic trade is still sluggish. , foreign trade orders are limited, and the subsequent demand situation is still doubtful. After a large amount of replenishment in the early stage, the terminal has returned to a cautious wait-and-see mentality. There is no substantial positive support for the subsequent improvement of PTA transmission to the downstream. PTA downstream demand is stable in the short term.

Overall, the cost side has fluctuated greatly since September, which has limited support for the PTA market. PTA is affected by external factors and the market price has risen due to poor spot circulation in the market. Then as the delivery ends and the impact of the typhoon weakens, coupled with the expected release of new production capacity, the supply-side benefits may be exhausted. Under the weak textile demand, it is difficult for polyester demand to improve significantly, and we need to be wary of a sharp drop in PTA market prices. . The follow-up focus will be on the trend of international oil prices, changes in PTA units and downstream demand.

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Author: clsrich