Reposted from: Futures Daily
The supply and demand of PTA are both weak, and the price is difficult to rise. However, the undervaluation makes the downside of PTA limited. In this case, PTA may continue the weak and volatile trend.
Undervalued valuations limit downside
At present, PTA as a whole is in a pattern of oversupply, and the futures price has been fluctuating at a low level for a long time. From the point of view of cost, the current PTA production enterprises have a loss of 170 yuan/ton, and the processing fee is 430 yuan/ton, which is at a relatively low level. At the same time, the market is not optimistic about the market demand in the later period, and the discount of the futures price to the spot price is about 200 yuan/ton. Therefore, at present, PTA is in a situation where spot production companies are losing money, processing fees are low, and futures are lower than spot prices. From the perspective of valuation, the downward space of PTA is relatively limited.
Due to the poor production and operation conditions, Yizheng Petrochemical, Xinjiang Zhongtai and other plants have recently shut down or declined, and the start-up load of domestic PTA production enterprises is in a downward trend as a whole. As of December 2, the operating load of domestic PTA manufacturers was 67.49%, a decrease of 6.41 percentage points from the same period last year. What is more optimistic is that the current inventory of PTA is at a normal level, and there is no obvious accumulation phenomenon. As of December 1, the domestic PTA raw material inventory was 4.76 days, a decrease of 0.64 days compared with the same period last year. From the perspective of supply, although the start-up load of PTA is lower than that of the same period last year, and the inventory is low, compared with the recent large-scale reduction of downstream loads, the overall supply is still relatively sufficient.
The load of the weaving industry has dropped significantly
According to the data released by the National Bureau of Statistics, the domestic manufacturing PMI was 48 in November, and it has been below the line of prosperity and decline for 6 months in the past 9 months. The market demand for clothing has begun to decline. At the same time, affected by high inflation in Europe and the United States, overseas purchasing power has declined, and clothing exports have also declined. According to data released by the General Administration of Customs, my country’s total export of clothing products in October was 13.569 billion US dollars, a year-on-year decrease of 16.8%. Affected by insufficient external demand and weak domestic demand, domestic textile orders have declined, and the start-up load of the terminal weaving industry is much lower than the level of the same period in previous years.
As of December 2, the start-up load of the domestic polyester industry and terminal weaving industry were 76.43% and 40% respectively, down 7.79 and 20 percentage points from the same period last year, and the downstream and terminal demand for PTA was weak. At the same time, due to poor terminal demand, a large number of polyester products have not been digested by the market, but exist in the form of inventory. As of December 2, the domestic inventories of polyester filament FDY, polyester filament POY, and polyester filament DTY were 33.7 days, 33.4 days, and 40.8 days, respectively, up 11.2 days, 12.9 days, and 16.3 days from the same period last year. Increased by 49.78%, 62.93%, and 66.53%. At present, polyester enterprises not only need to face the pressure of insufficient orders and destocking, but also the production is still in a state of loss, which makes the production enthusiasm of enterprises insufficient, and the demand for PTA stocking is even more limited. On the whole, there is no sign of changing the status quo of weak PTA demand, and the overall weak PTA price pattern is difficult to change.
To sum up, on the one hand, the overall operating conditions of the chemical fiber industry chain are not good, especially the start-up load of the terminal weaving industry has dropped sharply, and the accumulated pressure is gradually transmitted to the upstream of the chemical fiber industry chain, which will further reduce the processing fees of enterprises and force enterprises to Lower the burden. In this case, it is difficult for PTA prices to have upward momentum. On the other hand, PTA manufacturers are currently in the red, processing fees are low, futures are discounted to spot prices, and valuations are generally low, with limited downside. Based on the above judgments, it is expected that PTA will be difficult to change the current pattern of low volatility. (Author unit: Zhongyuan Futures)
Editor: Wu Zhengsi
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