"High Profits" Can Not Stand "Low Demand" PTA Market Rally Is Difficult To Continue.

Last week, tensions between the US and Iraq continued to bring support for oil prices. Meanwhile, OPEC and non OPEC oil producing countries have agreed to extend the production agreement for 9 months, and will continue to maintain the 1 million 200 thousand barrels per day production scale. At present, OPEC crude oil output has fallen below 30 million barrels / day mark, the lowest since April 2014, and the US oil has gone up 3 consecutive days.

US oil rose, driving PTA up. On 10 and 11, PTA futures rose more than 3%. However, on the 12 day, PTA dived and dropped 100 yuan / ton. Until the end of 15 days, the 1909 main contract of PTA futures market of Zhengzhou commercial bank closed at 5918 yuan / ton, compared with the settlement price of the previous trading day, a sharp decrease of 112 yuan / ton, or 1.86%.

In fact, there are also reports that the tropical storm has caused us crude oil output to drop by nearly 70%. The positive effect of crude oil can bring some support to PTA. But why is PTA doing the opposite?

01

PTA profits still fall

Since the first half of this year, PTA profits have been at a volatile stage. On the 2 day, PTA's profit was 1787 yuan / ton, reaching a high level for half a year. Recently, with the decline of PTA futures price, the spot price has declined. At present, the profit of PTA is near 1380 yuan / ton, while the profit of PX is -8 yuan / ton, MEG's profit is -14 yuan / ton, and the profit of polyester DTY has been in -89 yuan / ton, the same is polyester product, their profit has already been in a state of loss.

It can be seen that although the profits of PTA have declined, compared with PX, MEG and polyester filament, the profit of PTA is still in the high level of 1000 yuan, and there is still a larger downward space.

02

Stir up and stir.

At the beginning of the month, China and the United States resumed economic and trade consultations, and the tariff threat of $300 billion was eliminated. The news is that the PTA market is boiling, and the main contract has increased by more than 5%. On the 4 day, PTA futures closed down again. On the 10 and 11 th, PTA futures rose more than 3% at the end of the day. On the 12 day, the PTA futures market plummeted 100 yuan / ton. In the past half a month, PTA has been in a state of skyrocketing and plunging.

Downstream market is actually not satisfactory, weaving manufacturers do not have obvious large single pick up, grey fabric inventory is still at a high level, weaving profit is still compressed, the market is still in a recession, but PTA has risen sharply, leading to the polyester filament price inflation, leading to the downstream weaving factory family complain incessantly: hype! It's all hype! Now that PTA is down, it is unavoidable that there are reasons why "stir up".

03

In the late stage, the new equipment will be put into operation, and the situation of oversupply of PTA will not change.

At present, PTA is still in a tight supply situation, resulting in PTA spot processing fees up to 2000 yuan / ton, comparable with last year's PTA spot price up to 9000 yuan / ton processing fees. The tight supply of PTA is still at a high level of over 1000 yuan.

However, it is understood that the PTA social inventory has about 1 million 300 thousand tons, compared to 2018 in August, inventory of 600 thousand tons, or relatively high level. It is reported that 2 million 200 thousand tons of PTA plant will be put into operation in September. At that time, the capacity of PTA will only increase, which will eventually lead to oversupply. At the same time, there are rumors that fourth quarter Hengli 2 million 500 thousand tons of PTA plant will be put into operation, once implemented, PTA supply side pressure increases, prices will be difficult to climb.

04

Terminal demand is still negative feedback.

As we all know, more than 50% of PTA is used to produce polyester filament, so the reverse effect of PET filament on PTA is very great. Last week, PTA surged and plummeted, and the production and sale of polyester filament was weak. At the lowest time, the production and sale of polyester filament was only around 10-20%. The production and sale of polyester filament is not good. In the final analysis, there is still a shortage of demand for downstream weaving factories. And whether the weaving factories are stockpiling raw materials or not depends on whether the orders in the terminal clothing market can be delivered.

In the first half of this year, the global macro environment weakened and consumer demand declined. The textile and garment sectors once again entered the tired inventory stage. At present, the price and earnings ratio of the entire textile and garment industry is in a relatively low historical position. In the second half of the year, the terminal textile and garment industry is still facing many unoptimistic factors, especially the Sino US trade relations are still uncertain, the foreign trade environment is hard to say, and the demand of the terminal is limited inside and outside, so the market of polyester market is hard to improve greatly. Therefore, the fluctuation or downward trend of PTA in the near future is also the trend of the times.

Even if the reduction of crude oil can have a certain cost support for PTA, but the downstream polyester production and marketing is not good, the terminal grey cloth inventory is too high, in a short time, PTA is rising or unsustainable. This time, PTA can no longer accompany the crude oil craziness!