Is It Time For PTA To Short?

As a recognized overcapacity variety, PTA's rising every time has no lack of bearish voice, but has not prevented PTA from rising continuously after the Spring Festival. Among them, the cost plays a decisive role in this round of rise, PTA does not have the short conditions before the upstream cost side falls.

Overcapacity, profit compression, does not mean that prices must fall

In recent years, PTA capacity expansion is rapid, inventory is high, and the problem of excess supply has been more prominent, but the most direct impact of excess supply is the production profit of enterprises rather than the absolute price of PTA. Since January, with the rise of PX price driven by the strength of crude oil, PTA processing fee has shrunk significantly. PTA spot processing fee has been down from about 550 yuan / ton at the end of December last year to less than 300 yuan / ton in late February. The factory production has no profit, so PTA plant maintenance plan in March and April increased, processing cost compressed space narrowed, the impact of cost on PTA price is more obvious. After further strengthening of crude oil, PTA rose continuously from February 22, and then rose again after falling with high crude oil level last week. In short, the main driving factor of PTA strength is cost, and the premise is the continuous compression of processing costs.

The meeting of OPEC + oil producing countries is better than expected, and crude oil is difficult to fall back in the short term

Saudi Arabia is widely expected to cancel an additional 1 million barrels of production cuts in April, while OPEC + producers will increase production by 500000 barrels. The final outcome of the OPEC + oil producing countries meeting exceeded expectations. Not only did Saudi Arabia not cancel the additional production reduction, but the output of other countries was also lower than expected (only Russia and Kazakhstan increased 150000 barrels in April), which has pushed oil prices to rise continuously.

On the basis of oil producing countries maintaining favorable output reduction, the US $1.9 trillion economic stimulus plan will be passed this week. Good superimposed good, crude oil rate will remain easy to rise but difficult to fall. However, to change the trend direction of crude oil mainly depends on the supply side. One is Iran's supply. At present, the U.S. - Iran negotiations are still in a stalemate stage. The higher oil price may stimulate Iran to make concessions to resume exports as soon as possible; the other is the domestic production of OPEC + oil, which will increase sooner or later, but the market expects that the increase will probably be in late March. At the same time, in addition to the supply side, attention should also be paid to the possible shift of U.S. monetary policy and the periodic impact of the stronger US dollar index on crude oil. It will take time for the above potential bad effects to be realized, and the crude oil rate will maintain a strong trend before the end of March.

Polyester profits, start up quickly, PTA demand is guaranteed

At present, the overall operating rate of polyester downstream of PTA has risen to 90%, reaching the normal level before the Spring Festival, and the recovery rate of polyester production is faster than that of the same period in previous years. This is related to the "Spring Festival on the spot" initiative. More importantly, the market's optimistic expectation of textile and clothing demand after the Spring Festival has boosted the enthusiasm of terminal replenishment. The price of polyester products has continued to rise, and the profit has improved, which has further stimulated the rapid recovery of polyester end construction after the festival. Although the prices of upstream raw materials PTA and MEG have increased greatly recently, compared with the beginning of February, the spot production profit of staple fiber increased by 200-300 yuan / ton on March 5, and the production profit of DTY and POY filament increased by 400-600 yuan / ton.

The profit of polyester products is better, which indicates that the downstream terminal demand is improved obviously. Next, the polyester operating rate will remain at a high level, PTA and MEG demand will continue to improve, the global epidemic situation has boosted the market demand for textiles, and the loom operating rate of Jiangsu and Zhejiang has also rebounded to the normal level of about 80%.

Future prospects

PTA future market still depends on the cost. Due to the limited space of processing fee contraction, the impact of recent cost is very obvious, and the trend is closely following the crude oil. Under the good promotion of crude oil, PTA rate will maintain a strong trend. If a large number of plant maintenance plans are fulfilled in March and April, PTA strength will be more sustainable. At present, the time for PTA to short has not yet come.