PTA Oversupply Will Aggravate Prices Or Will Continue To Seek Bottom.

The recent trend of crude oil prices is warmer, and PTA futures prices have picked up slightly. In terms of installations, Fuhai new plant will produce qualified products, the market supply will increase, and the spot circulation will be good. The basis is also weakening. At the same time, the downstream polyester production and marketing will continue to be light. Therefore, we expect that PTA prices will continue to be weak without the obvious good news.

The cost side is hard to achieve.

Cost side, the real contradiction of oil market is still concentrated in demand. In the short term, oil prices are vulnerable to unexpected events, including geopolitical issues. In the future, the news is complicated, and macro and fundamental interactions, including whether the US Federal Reserve cuts interest rates or so on, deserves constant attention. Therefore, oil prices are expected to be dominated by interval shocks in the near future.

In addition, because there are more new devices at home and abroad, the price of PX will form a downward pressure. Therefore, in the next one to two months, the cost side will hardly become the driving force to drive up the price of PTA.

The supply side is still tight.

From the supply side, Fuhai set up near the end of the repair, PTA falls under the new device maintenance follow-up, but need to see the implementation. Fuhai 4 million 500 thousand tons / year PTA plant plans to restart this weekend, due to the collapse of PTA futures this week, many PTA companies have announced their own maintenance plan for -9 month in August, including Jiangyin Han bang, Yizheng chemical fiber, Hua Bin petrochemical, Hengli petrochemical, Jialong petrochemical, Honggang petrochemical and so on.

However, in terms of new capacity, Hengli Petrochemical 2 million 500 thousand tons / year PTA plant was planned to be put into operation in October 20th. The market did not anticipate that the launch schedule would advance or affect the market mentality to a certain extent by the end of 2019.

Weak demand side

Polyester demand continues to decline, polyester manufacturers started to decline 1% to 85% last week, and downstream Jiangsu and Zhejiang looms start up by 7 to 65%. And last week, due to the PTA spot drop, polyester manufacturers stocking caution, downstream demand decline. Last Friday, polyester production and sales rose to 140-150%. Other times, the basic performance of polyester production and marketing was sluggish, and maintained at around 4-5 per cent.

In terms of inventory, last week polyester production and marketing continued to slump, polyester polyester continued storage, polyester chip stock increased 2.9 days to 7.5 days, polyester short stock increased 2 days to 6 days, polyester FDY inventory increased 1.5 days to 13.5 days, polyester long DTY increased 2 days to 22 days, polyester long POY increased 1 days to 8 days.

To sum up, due to the good profit in the early stage, the large scale production of the production enterprises and the shrinking of terminal demand, the problem of over supply of PTA has intensified. Although the price of PTA has dropped sharply in recent years, the price of PTA will continue to be bottoming out, or in the short run or in the weak. (source: Baocheng futures, founder metaphase)