PTA: Sluggish demand, weak consolidation

Under the influence of high polyester inventory and slow recovery of terminals, PTA ** is difficult to perform in the short term and is mainly based on weak consolidation.

PTA** main contract 1205 stopped at the beginning of February and then stopped at 9246. After a little oscillation, the price fell below the 9000 mark. Later on, the macro-side “down” and the PTA and PX monthly settlement price were higher than expected. Under the influence, from the end of February to the beginning of March, the 1205 contract regained its rally, but it did not break 9246. In recent days, it fell into adjustment again. The author believes that the rebounding momentum of the PTA market mainly comes from the macroscopic transformation and cost promotion, but the demand side has not been effectively improved.

The weakening of upstream support efforts Recently, under the influence of geopolitical factors, the international oil price center quickly moved upwards. NYMEX crude oil ** hit twice the strong pressure threshold of US$110/barrel on February 24 and March 1, but eventually failed. Because high oil prices constitute a ** for the real economy of developed countries, causing investors to take profits, the slowdown in economic growth has caused investors to rekindle fears of falling demand for crude oil. China lowered its 2012 economic growth target to 7.5%, after China had set its economic growth target at 8% for seven consecutive years. In its monthly "Short-Term Energy Outlook" report, the EIA lowered its oil demand forecast for 2012 and 2013. If the oil price cannot be broken upwards, the upward momentum of the entire chemical industry chain, including PTA, will weaken.

In the past month, PX prices hovered above 1,600 U.S. dollars per ton, and settlement prices in March reached 1,650 U.S. dollars per ton. High PX prices have played a solid cost support role for the PTA market. However, the price of crude oil was blocked. In March, PTA companies overhauled and PX demand fell. There is no new factor to stimulate further breakthroughs in PX prices. At this time, PX's cost support can only narrow the adjustment space of PTA, and promote PTA before continuing. The line is ineffective. The trend of late PTA may gradually depend on changes in the demand side.

Slow destocking of polyester Due to weak pricing power, PTA's direct downstream polyester market has been subject to the PTA industry. Although PTA production is in a loss state, in order to reduce losses, PTA companies tend to increase their month-end settlement prices in order to shift downstream pressure on costs. The profitability of polyester is poor, production and sales are poor, and price reduction sales are common.

Since the Spring Festival up to now, the polyester factory has accumulated a large amount of inventory, and the recent staple fiber inventory is about 14 days. However, the stock of filament products is relatively serious. POY, FDY and DTY stocks are about 18 days, 21 days and 33 days. Last week, under the influence of the rebound of PTA, polyester production and sales had a modest recovery, but the sustainability was not strong and inventory was still high.

The lack of terminal demand is affected by many factors. After the Spring Festival this year, the demand for terminals has been slow to recover. At present, the load of Jiangsu-Zhejiang looms is around 62%, compared with 70% in the same period of 2011. Sluggish demand for terminals has led to poor transmission in all links of the industry chain. This is the main reason why PTA** cannot continue to rebound.

PTA, polyester, and Jiangsu, Zhejiang loom load change diagram

Although it is currently approaching the traditional peak demand season, the demand for the textile market has not seen improvement. The textile and clothing industry is a traditional labor-intensive industry, and it is also an industry with high dependence on exports. In this year's rising labor costs, the company's labor costs have risen sharply, which has increased the operating pressure of the company. At the same time, affected by the European debt crisis, orders in the external market decreased. China Textile Industry Association expects that in the first half of 2012, the shortage of domestic textile and apparel export demand and the pressure of competition will become more prominent. In the first half of the year, the number of industrial exports will remain low or increase.

In summary, under the background of oil price obstruction and PX demand falling, PX's impetus to PTA will weaken, and changes in the demand side will determine the trend of PTA in the later period. However, under the influence of high polyester inventory and slow recovery of terminals, PTA ** is difficult to perform in the short term and is mainly based on weak consolidation. (**daily)