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Into The 2020, PTA Market Will Face Double Pressure In The First Quarter?

2020/1/6 11:55:00 0

2020 PTA First Quarter Quotes

The capacity expansion of the PTA industry has been evident in the past 2019. Especially in the northwestern province of Xinjiang, China and Thailand textile group's PTA project has recently stepped up production, it is a hot feeling of expansion. Against this background, PTA will face greater pressure on storehouse in the first quarter of 2020, or the price will fall down.

Recently, as the polyester plant began to repair and some PTA devices were overhauled and resumed, the PTA market returned to the rhythm of pressure downwards before November 2019. In mid December 2019, the spot price of PTA was 4860 yuan / ton, the main contract price was 4922 yuan / ton, the base price was -62 yuan / ton, and the processing difference basically fluctuated at 550 yuan / ton. But this downward trend may be just the beginning. After the next Spring Festival holiday, the PTA market will face double pressure of cost reduction and capacity increase. The market pressure is obvious, the price will drop to 4400 yuan / ton.

In December 19, 2019, the price of PX was US $821 / ton, and the spread of cracking fell to near us $250 / ton. PX prices are expected to decline sharply in the first quarter of 2020. In 2019, domestic PX production capacity increased by 11 million 900 thousand tons (including Hengyi Brunei project), mainly concentrated in the second half of the year, with capacity growth of 80%. However, since the fourth quarter of 2019, the demand for terminal and polyester is strong, the overall load of PTA devices is high, and the pressure of PX capacity delivery is not obvious. But in the first quarter of 2020, along with the arrival of the traditional low season of the textile downstream market, the pressure of the rapid increase of PX production capacity will be highlighted. Its social inventory will exceed 3 million tons, and the processing cost of PTA may be reduced to about 4000 yuan / ton from the recent 4360 yuan / ton.

Similar to PX, PTA will also face pressure from supply expansion in the first quarter. According to statistics, in 2019 ~2020, a total of about 20 million tons of new capacity were released in the market. In the first quarter, the total capacity of domestic PTA will reach 52 million 580 thousand tons. If the device load is estimated at 80%, the corresponding apparent PTA production will be 7 million tons in 1~2 months. At present, the maintenance plan of polyester plant is basically released. From the end of December 2019 to February 2020, about 13 million 750 thousand tons of polyester production equipment will be cut down, accounting for about 23% of the total capacity of 58 million 500 thousand tons. In 1~2 months, the apparent demand for PTA for polyester is estimated at around 6 million 400 thousand tons. From this analysis, PTA will face greater pressure in the first quarter, and the price is expected to decline. Combined with the price forecast of PX, PTA processing will be reduced to less than 400 yuan / ton.

In the past two years, the newly developed PTA plant has advanced technology and low cost. If combined with marginal effects, the processing error can even be reduced to around 250 yuan / ton. Moreover, some of the new capacity groups have already opened up upstream or downstream, and enterprises can also get through the upstream and downstream dilution costs. These enterprises have strong cost advantages and strong competitiveness and willingness to speed up competition. In contrast to polyester production plan of about 4 million 750 thousand tons in 2020, PTA has 16 million 300 thousand tons of new capacity on the schedule, which will allow the market to digest the increased capacity or eliminate the old capacity over a long period of time.

Of course, the market also needs to pay attention to the following risk points. First, although the Spring Festival holiday is approaching, the current stock market in the polyester market is low. Whether enterprises will postpone or cut down production for the sake of stock preparation still need to pay close attention to it. Two, in the first quarter, the new capacity of PTA still needs to be further observed in two aspects, including whether the new plant can be put into operation on schedule, and whether the load of the plant can reach a higher level quickly after commissioning. Three, whether OPEC will continue to deepen the reduction of crude oil production, thereby driving up the price of crude oil and supporting the cost of PX and PTA.

Overall, in 2020, the main theme of PTA's market will be low processing and productivity changes. After the Spring Festival, PX prices will fall or PTA profits will decline further. The processing difference of 600 yuan / ton will become the "ceiling" of poor processing of PTA enterprises in the future. In the face of a new surge of capacity expansion, it is possible to use PTA futures and options to lock in profits ahead of time and hedge risks.