International oil prices closed at a new low overnight, with energy and chemical futures almost all turning green on the 4th, with polyester chains leading the decline. Among them, ethylene glycol fell by 2.86%, staple fiber fell by 2.74%, and PTA fell by 2.05%. The OPEC ministerial meeting agreed to increase production by 100,000 barrels per day in September, as the availability of excess production capacity was very limited, and the production increase was less than expected, causing international oil prices to rise for a time. The market still believes that this increase in production is not enough to resolve the current market tensions. However, after the release of poor gasoline consumption data in the United States, U.S. oil prices plummeted, and WTI set a new low since February 25.
PTA and the raw material PX are moving in the same direction. Since July, the market price has shown a rebound trend after a sharp drop. Thanks to the increase in unplanned maintenance of PX/PTA, the supply has gradually shrunk. However, after the sharp decline in raw materials, profits of polyester have gradually recovered and destocking has occurred. The load has rebounded, and the demand for TA has been stable. At present, PTA processing fees have also been restored, but costs and demand have been suppressed. The overall operating load of domestic PTA plants is less than 70%, but Baihong’s 2.5 million tons of PTA has been increased to full capacity. In August, Zhongfuhua’s 4.5 million tons of PTA will be restarted as planned after maintenance.
The main players in short fiber stockpiling have pulled back, and the fundamentals show a trend of decreasing supply and demand. Moreover, there is a lack of orders in the downstream yarn industry, and its own finished product inventory continues to accumulate. After mid-July, against the backdrop of weak downstream yarn purchasing capabilities, supply pressure in the polyester staple fiber industry gradually became apparent.
Ethylene glycol is still hovering at low levels, as port inventories rose sharply again at the end of July, exerting some pressure on prices. However, the market expects that ethylene glycol will achieve effective destocking starting in August. Currently, ethylene glycol is still in a game of weak reality and strong expectations. Green Dahua Futures Feng Xiaofen believes that in the medium to long term, as early maintenance equipment is restarted and new equipment is put into production one after another, ethylene glycol will most likely come under pressure and weaken again.
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