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Perhaps in July and August, the demand for polyester in the market in September was overdrafted. In September, the demand for polyester in the polyester market was not strong, and the downstream polyester factory lowered the price promotion, which reduced the rigid demand for PTA.
PTA after skyrocketing
Since the second half of last year, the price of PTA has also been rising all the way, driven by the rise in crude oil prices, but its increase has always been weaker than that of the upstream PX, and most of the industry's profit remains at PX. This situation changed in July this year, with the rapid depreciation of the RMB, the PTA price and the PX spread in the market for the PTA to continue to destock in the second half of the year and the PTA capacity growth of 10+ points in the coming year. Both are rising rapidly. Of course, due to the skyrocketing price of PTA in the short term, it has brought great pressure on the production cost of downstream polyester filaments, and it is difficult to form a good transmission. It can be said that the rise has lost the fundamental support, and there has been a clue to the callback. The author believes that due to the high price of crude oil and the market's judgment on the supply and demand situation of PTA in the next year, the callback is mainly to facilitate the downstream polyester filament, the range should be within 10%, after the downstream transfer cost increase impact The price of PTA may even rise.
At this stage, the PTA big factory still repurchases the PTA spot at a high price, and the PTA big factory receiving the goods is the only good market. As of September 13, the average spot price of PTA in September was around 9290 yuan / ton, and the PTA plant locked the spot price in September at a seven-year high. Even if the downstream factory in the second half of September contradicted the high price of PTA, the price of PTA will fall. According to the current starting load of 87% of downstream polyester, the PTA spot price will also be limited. It is estimated that the average PTA spot price will be higher in September, and the PTA settlement will be September. Prices will also be at several years high.
Downstream of profit shrinkage
The demand for polyester filament yarn, the main product downstream of PTA, is relatively stable, basically maintaining above 5% per year, and there is always a long-term rigid growth demand for raw materials. As it is currently in the peak season, normally, Q3 is the annual demand high, Q4 will still maintain good demand, even from the situation of the past two years, Q4 demand is as strong as Q3. However, in September, the feeling of gold, silver and silver in the industry has not appeared.
In September, polyester filament production and sales were at its lowest in the year, even lower than the February where the Spring Festival was held. Mainly because of the overdraft market demand in September from July to August, it is difficult for the terminal weaving factory to smoothly transfer the cost pressure brought by the previous PTA and polyester soaring. The enthusiasm for the purchase of polyester filament is not high. The loading load of the looms decreased to 66% in mid-September. Left and right, the demand for polyester filaments has declined. In mid-September, the polyester filament factory began to cut prices, but the price cuts increased the market's fearful atmosphere, or it was difficult to substantially boost the demand for polyester.
In the survey of the two largest polyester filament enterprises in the country, Tongkun and Xinfengming, it is learned that due to the strong demand of terminals, polyester filament enterprises are not unable to accept the price increase of PTA, mainly because they cannot be short-term. The price of raw materials has soared to the downstream. If the price cycle is lengthened, it can actually be digested relatively smoothly.
External macro factors
China’s exports of textiles to the United States account for 17% of total textile exports, and the US’s US$200 billion plus 10% tariffs include more than 1,000 textile and apparel projects, covering most textile raw materials, semi-finished products and a small number of clothing accessories. Products, which are more related to polyester. In the short-term, it seems that the demand for polyester will be suppressed, which will affect the terminal demand of the entire industrial chain. However, in fact, the transfer of entrepot trade and production capacity to Southeast Asia may be the only marginal change in demand growth. Does not affect the overall supply and demand pattern.
Conclusion
In the long run, with the next one year as the observation cycle, the international oil price will remain high, and the PX production capacity will be delayed. The PTA only has a small increase in production capacity of 2.2 million tons per year, and the demand for polyester filament yarn remains strong. The trade war has little impact on the terminal.
In the short-term, pay attention to whether the PTA big factory continues to receive high-priced goods, the downstream polyester factory production and sales are not good, and the terminal weaving factory complains. Zhongyu Information expects the short-term PTA market to fall in a narrow range.
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