Crude Oil Prices Are Going Up And Down. What Is The Future Of PTA Feedstock In Polyester Industry?

PTA and polyester factories are continuous production. Enterprises will lose millions of yuan when they stop production.

After a period of downturn, international crude oil prices rebounded sharply.

In the first half of this week, international oil prices continued to decline, WTI crude oil once fell through 20 U.S. dollars / barrel, but stimulated by good news, on April 2nd (Thursday), Brent's crude oil market rose nearly 40%, while WTI crude oil rose more than 30%. After that, although the oil price dropped, the US oil and cloth oil all hit the largest single daily percentage increase. The US WTI crude oil futures contract rose 5.01 US dollars in May, or 24.67%, at 25.32 US dollars / barrel. Brent crude oil futures contract rose 5.20 U.S. dollars in June, or 21.02%, at 29.94 U.S. dollars / barrel.

In April 3rd, as of press release, Brent crude oil futures rose to 10%, 32.93 U.S. dollars / barrel; WTI crude oil futures rose nearly 5%.

At present, the oil market is in a state of imbalance between supply and demand. At the supply level, oil inventories are still high, and the price war between Russia and Saudi Arabia is still continuing; at the demand level, the outbreak of the global epidemic has hit the demand for crude oil. The industry generally believes that crude oil prices are still at a low level in the long run.

The collapse of crude oil also impacts the cost of raw materials in polyester industry.

Insiders told the first financial reporter that the polyester industry chain is experiencing the coldest "cold winter" in recent years. It is difficult to resume work, logistics is not smooth, inventory backlog, and capital inflow is difficult, all of which are constantly putting pressure on enterprises. Recently, the overall inventory of PTA industry has been overloaded to millions of tons, and most enterprises are facing difficulties in production and operation.

Weaving enterprises "return blood" slowly

Affected by the epidemic, all industrial chains are facing different degrees of difficulty. Weaving enterprises in mid 2 months to usher in the turning point of production, even so, the polyester industry's operating rate is still less than 60%.

Haitong futures report analyzed the current PTA fundamentals, from the absolute price point of view, its upstream petrochemical industry chain crude oil prices continued to fall sharply, naphtha and PX followed a sharp decline. Judging from the processing price difference, naphtha cracking price difference fell, PTA spot processing difference again compressed to 500 yuan near the low position.

In terms of domestic demand, Meyer futures report pointed out that the outbreak of new coronavirus pneumonia had a great impact on the apparel retailing industry. The consumption of spun clothing is seasonal, and it is hard to make up for it. The causes of the epidemic, the disappearance of the Spring Festival peak season and the high school season, affect the sales of winter clothing and spring clothing, resulting in a serious backlog of clothing enterprises' inventory and a great impact on domestic clothing sales. According to customs statistics, in 2020 1~2, China exported textile yarn, fabrics and products 13 billion 772 million 500 thousand US dollars, down 19.9% compared with the same period last year, and exported garments and accessories 16 billion 62 million 300 thousand US dollars, down 20% compared with the same period last year.

Xu Jien, deputy general manager of Yisheng petrochemical PTA sales center, told the first financial reporter that due to the traditional Spring Festival belonging to the off-season consumption of polyester industry, the production enterprises usually stocked up during the Spring Festival and sold after the festival, but this year, because of the epidemic factors, the upstream production enterprises had a higher inventory, especially in February. However, the enterprises at the downstream end of the Spring Festival can not get back to work after the Spring Festival, and the whole industry chain can not buy raw materials, resulting in no inventory in the downstream. At the same time, the contradiction between the upstream and downstream industries leads to the shortage of cash flow, and the capital problem has finally become a big problem for enterprises.

Yisheng Petrochemical is a large-scale chemical private enterprise. Currently, it has three PTA production plants, with a total annual production capacity of 12 million 850 thousand tons of terephthalic acid (PTA), accounting for 24.56% of the total PTA capacity of the country.

"Under normal circumstances, PTA and polyester factories are continuous production, and enterprises will lose millions of yuan when they stop production, so they will maintain production under normal conditions." Xu Jien said that under the influence of the epidemic, the sales of PTA enterprises had been partially affected. However, as several large PTA manufacturers in China relied on the advantages of integration from oil refining to polyester production, the operating rate of the PTA industry in February did not change very much. It is also precisely because of this factor that the accumulation of high deposits is quite obvious after the Spring Festival.

He said, according to the February inspection and maintenance situation, the total output of polyester industry is about 3 million 600 thousand tons in that month. Therefore, the pressure of PTA supply and demand storage has increased dramatically, and the monthly storage volume has expanded to 1 million tons, creating a record high of single month storage.

At the same time, Xu Ji en also said that the downstream side also showed very optimistic situation, which is manifested in the following aspects: first, the low utilization rate of weaving enterprises to the freezing point; two, the low enthusiasm of weaving enterprises; three, the stock of polyester products has reached a new high in recent years; four, the polyester load has reached a new low. In addition, PTA social inventories also set a new record in synchronization. PTA load followed the processing fee fluctuation, resulting in a larger decline in the price of PTA products.

During the epidemic period, the futures hedging enterprises basically solved the problem of sales terminals, and effectively solved the risk of high inventory. "The company uses derivatives to conduct risk management, through hedging, hedging, processing fees, arbitrage and other strategies to effectively solve the risk of inventory accumulation, cost rise and base fluctuation."

Derivatives tools help

Such factors as poor logistics, overstock, and inability to turn capital have become unavoidable problems in polyester industry during the epidemic. In response to these problems, the reporter learned a lot recently that in addition to Hubei Province, the turning point of enterprise production was only in the middle of 2. Even so, the starting rate of polyester industry is still less than 60%.

In the use of derivatives to manage risks, industry insiders say that polyester industry chain enterprises also focus their attention on futures market and seek diversified solutions in addition to controlling risks in policy, production regulation, optimizing inventory, reducing operating costs and capital flow. PTA enterprises, polyester factories, and related traders use futures to hedge, and use futures derivatives such as processing fee maintenance, risk free arbitrage, etc., to solve the problems of sales decline and high inventory.

Yisheng Petrochemical has also achieved many good results through the development of multiple hedging schemes in terms of digestion, inventory reduction, cost reduction and lock in revenue.

"For the impact of the epidemic and crude oil slump, the company hedged ahead of PTA futures to set up positions." Xu Jien said, first of all, the hedging of commodity prices, the company choose to build corresponding blank list on futures, lock the selling price of PTA, and in the future, when the spot price transaction is sold, it is necessary to complete the transaction according to the reasonable market discount and increase the risk of fluctuation of absolute price to the basis risk, greatly reducing the risk of stock depreciation caused by price fluctuation. 。

In addition, inventory management is also carried out. According to the company's production and sales plan, the excess inventory will be sold and delivered, and the funds will be recovered to keep its inventory at a reasonable level. During the epidemic, coupled with the sharp decline in crude oil prices, some customers reduced demand, resulting in the company having to increase the delivery strength on the PTA2003 contract, selling about 50 thousand tons in the month delivery, solving the problem of inventory accumulation, and also solving the problem of capital.

Xu Jien said that at this stage, the familiarity and utilization rate of PTA futures in polyester industry are very high. The PTA option has also brought more exploration space to polyester industry chain enterprises. At the same time, when using derivatives tools, enterprises should pay attention to the hedging positions. They must make real-time changes according to the production and operation of enterprises. We must insist on the idea of hedging. We must remember that we should not make the unilateral insurance transactions into unilateral speculative transactions, and pay attention to wind control.