Recently, the China Federation of Petroleum and Chemical Industries issued a report on the economic operation of the petroleum and chemical industries from January to February. From January to February, the economic operation of the petroleum and chemical industries was generally stable. The production of oil and gas and major chemicals in China has accelerated, the market has reached a bottom and stabilized, which is better than expected; foreign trade has maintained growth; investment has rebounded rapidly and consumption has increased rapidly. However, the downward pressure of the industry’s economic operation is still great; the market differentiation is obvious, and the momentum of recovery is insufficient; the cost is high, and the benefit is declining.

Rapid growth of energy consumption

From January to February, the operating income of the petroleum and chemical industries was 1.79 trillion yuan, a slight increase of 0.1% over the previous year, accounting for 12.1% of the operating income of large-scale industries in China.

The data show that from January to February, the apparent consumption of crude oil and natural gas in China totaled 160 million tons (oil equivalent), an increase of 10.4% over the same period last year, an increase of 0.8 percentage points over the same period last year; the apparent consumption of major chemicals increased by 3.9%, an increase of 4.2 percentage points over the same period last year.

Crude oil consumption increased, while natural gas slowed down slightly. From January to February, the apparent consumption of crude oil in China was 113 million tons, an increase of 9.3% compared with the same period last year, an increase of 2.4 percentage points and an external dependence of 72.7%. The apparent consumption of natural gas was 52.35 billion cubic meters, an increase of 13.2%, a decrease of 3.6 percentage points, accounting for 29.5% of the total apparent consumption equivalent of crude oil and natural gas, and an external dependence of 45.2%. From January to February, the apparent consumption of domestic refined oil was 52.5 million tons, down 2.1% from the same period last year. Among them, the apparent consumption of diesel oil was 24.538 million tons, a decline of 7.9%; the apparent consumption of gasoline was 21.727 million tons, an increase of 4.6%; and the apparent consumption of kerosene was 6.235 million tons, an increase of 0.5%.

Import and export trade keeps growing momentum

In the first two months of this year, import and export trade in the petroleum and chemical industries maintained a momentum of growth. Customs data show that from January to February, the total import and export volume of the whole industry reached 113.19 billion US dollars, an increase of 4.1% over the same period of last year, accounting for 17.1% of the total import and export volume of the whole country. Among them, total exports amounted to 33.38 billion US dollars, an increase of 2.7%, accounting for 9.5% of the total national exports; total imports amounted to 79.8 billion US dollars, an increase of 4.7%, accounting for 25.8% of the total national imports. The trade deficit between January and February was 46.42 billion US dollars, an increase of 6.1% over the same period last year.

In February, the total import and export volume of the petroleum and chemical industries was 49.58 billion US dollars, an increase of 1.3%. Among them, exports dropped by 9.5% to $13.59 billion, while imports increased by 6.1% to $35.99 billion. The total export volume of refined oil (steam, coal and firewood) was 4.48 billion US dollars, with a growth rate of 23.5%, accounting for 13.4%; the export volume was 7.842 million tons, up 27.5%.

From January to February, China imported 81.83 million tons of crude oil, an increase of 12.2% over the same period last year; the import amount was 35.91 billion US dollars, an increase of 3.9%, accounting for 45.0% of the total import trade of the whole industry. Imports of natural gas reached 24.150 billion cubic meters, an increase of 18.1%, and imports amounted to $8.46 billion, an increase of 46.6%.

Benefits of the petroleum and chemical industries have fallen sharply

Since this year, the benefits of the petroleum and chemical industries have declined substantially. From January to February, the total profits of the whole industry amounted to 81.91 billion yuan, down 37.3% from the previous year, accounting for 11.6% of the total profits of large-scale industries in the same period. The operating income cost per 100 yuan was 82.93 yuan, up 1.86 yuan from the same period last year; the loss area of the industry was 28.9% and increased by 6.1 percentage points from the same period last year; the total assets amounted to 12.5 trillion yuan, up by 5.7%, and the asset-liability ratio was 55.43%, down by 0.12 percentage points. From January to February, the profit margin of the whole industry’s operating income was 4.58%, down 2.74 points from the same period last year; the gross profit margin was 17.07%, down 1.86 points.

Among them, the benefits of oil and natural gas exploitation industry are basically stable, and the profits decrease slightly. From January to February, 293 enterprises in the oil and gas exploitation industry achieved total profits of 25.34 billion yuan, down 2.4% from the same period last year, accounting for 30.9% of the total profits of the petroleum and chemical industries. Among them, the total profit of oil exploitation was 18.78 billion yuan, down 6.1%, while that of natural gas exploitation was 6.75 billion yuan, down 4.8%.

Downstream Pressure Initial Upstream Production and Landing

At present, with the onset of Hengli PX production capacity, the weakening of PTA cost has become a foregone conclusion. At the same time, with the increase of PTA plant maintenance and the recovery of downstream polyester demand, PTA is expected to be phased out of stock. From the current market point of view, the supply of tight long logic and cost-side weakening short logic is still in the game. At the seminar on PTA industry chain Market Analysis in the second quarter of 2019, sponsored by Futures Daily in Hangzhou and supported by Zheng Shang Suo, the “big cafe” of various related industries analyzed the trend of PTA aftermarket from the specific situation of upstream and downstream.

Downstream Polyester Pressure is Initial

“The consumption of downstream polyester has a great impact on PTA supply and demand this year. The current supply is a “clear card”, but the growth rate of demand is not clear, it has a very big impact on PTA supply and demand this year is tight or loose. Wang Guangqian, research director of Ningbo Hengyi Industrial Co., Ltd., said at the meeting that from the point of view of the textile ecological chain, the pressure of excess warp knitting supply has begun to emerge.

In fact, according to Futures Daily reporters, China’s textile industry has a high degree of export-oriented in the past few years, with a large proportion of exports. However, in the past two years, the proportion of demand has increased significantly, and the proportion of exports has gradually decreased. Among them, domestic demand mainly includes three parts: textile and clothing, home textiles and infrastructure.

“Clothing accounts for the largest proportion of domestic demand. At present, with the end of the clothing replenishment cycle, it means that the growth rate of demand for raw materials will decline steadily. Wang Guangqian said that before 2016, the apparel industry was in the stage of de-inventory. We can see that the number of physical stores of apparel enterprises has been decreasing. Since the Hangzhou G20 Summit in 2016, garment demand has increased again, and the replenishment of the storehouse in 2016-2018 has stimulated the growth of polyester consumption. Clothing replenishment cycle is about 2 years. With the end of clothing replenishment cycle, the pulling effect on polyester raw material consumption is weakened.

Home textiles are closely related to real estate. Wang Guangqian said that with the end of the super boom cycle of real estate, the growth rate of demand for raw materials for home textiles will decline substantially. “Since 2015, this super real estate cycle (improvement + speculation + hardcover) is the main force driving the outbreak of home textile market demand. However, the real estate cycle has ended in the third quarter of 2018. The demand for real estate home textiles tends to weaken after replenishing the warehouse in the third quarter of last year. Warp knitting machines are the first to feel chill. The demand for real estate home textiles in 2019 will obviously slow down, and the demand for warp knitting will be difficult to improve. This means that the growth rate of demand for raw materials for home textiles will be greatly reduced. He said.

In fact, the pressure on the weaving sector brought about by the slowdown of terminal demand will first be reflected in the production profit, and then be transmitted to its own supply and the demand for raw materials. “At present, the profits of weaving and elasticity have been damaged, and the later stage will be the transition to the contraction of the supply side. In addition, it will also affect the enthusiasm of raw material stockpiling. Wang Guangqian said at the meeting.

On the export side, Wang Guangqian said that the growth rate of textile and apparel exports in the future is expected to remain low (negative growth). After the gradual easing of Sino-US trade frictions at the end of November last year, American apparel wholesalers made use of the rare time window period to replenish their stocks. As a result, the inventory-sales ratio of American apparel wholesalers rose sharply from December last year to January this year. Domestic orders were released sharply in early January, and the end weaving was in the process of catching up with orders throughout the first quarter. The consumption level of polyester raw materials was at a high level. After the polyester festival, the construction began at a high level, and the obvious inventory pressure was still not felt. Inventory transfer from polyester to weaving, and polyester inventory pressure transfer to terminal. “In view of the disappearance of the effect of centralized export rush in the first quarter, it is expected that the export data in the second quarter will be rather bleak, or maintain a low speed or even negative growth, and textile and garment exports throughout the year will be difficult to say optimistic.” Wang Guangqian said.

“With the slowdown of terminal demand, it is expected that the new capacity of polyester production will also slow down in 2019.” Wang Guangqian said that in the first quarter of this year, the growth rate of polyester production was around 9%, which implied a large overdraft of future demand. In his view, polyester demand will not sustain this growth rate in 2019. “It is estimated that China’s polyester production will reach 48.8 million tons in 2019, with a growth rate of about 7 percent.”

“If we estimate that PTA production will increase by 3.2 million tons and polyester production will increase by 9% in 2019, September will be quickly depotted and there will be a greater risk. If estimated by 7% growth rate of polyester production and 3.2 million tons of PTA increment, the supply-demand balance sheet will maintain a relatively tight balance and accumulate again in the fourth quarter. There will be no obvious gap between supply and demand as a whole, but there will be about 1.2 million tons of end-of-term inventory by the end of the year. Wang Guangqian said that from the point of view of demand, PTA supply and demand this year may be far less tense than you think.

The change of PTA industrial chain pattern will lead to profit redistribution

Since 2019, with the production and landing of Hengli and other enterprises, PX supply has introduced new forces, and the original supply pattern of PX will change. “ACP vendors and Suppliers account for about 30% of Asia’s production capacity and more than 50% of the negotiable trade volume. They have a strong voice in the price of PX. PX producers in mainland China are highly concentrated, with only seven suppliers, and the top five Suppliers account for more than 80%. With the production of Hengli and Zhejiang Petrochemical PX, the original supplier-led PX trade market pattern will be impacted. Qin Hao, PTA sales manager of Fuzhou Chemical Trade (Zhangzhou) Co., Ltd., said at the meeting that PX in Japan, Korea and other countries has a high dependence on the Chinese market and will face the impact of the replacement of PX localization in the future, while the newly built integrated devices in China have obvious advantages in production and operation costs, consumer markets and channels.

“PTA as a downstream product of PX, PTA production capacity in the last three years has almost maintained a stable level, almost no new capacity introduced, but there will be some changes in production. Although the industry is in a capacity-free cycle from 2015 to 2017, during this period, due to the slow downstream driving, output has maintained a steady growth level. Qin Hao said that the total effective capacity of PTA according to CCF statistics is 45.78 million tons. Yisheng, Hengli and Fuhua account for more than half of the total capacity. The growth of PTA supply in the next two years is basically based on the expansion of the original suppliers, and some downstream enterprises are mainly extended upward, the concentration of the whole industry will be improved.

Qin Hao said that in the next two years, Hengli, Xinfengming, Baihong and Yisheng will be decided to put into operation, so the expansion is mainly based on the internal expansion of the industrial chain. “After this round of expansion, the vertical integration of the whole industrial chain deepens, many enterprises have a more vertical and perfect supply system from upstream to downstream, which will lead to the production capacity of PX, PTA and polyester eventually become a mutual supply system within an enterprise or a group, and the cash flow to the market will be reduced, which will weaken the liquidity of some spot in a disguised way.” Qin Hao said.

In addition, the volatility of commodity prices will also decline. “Because after vertical integration, these enterprises have good means and tools to adjust and distribute profits. If there is excess profit in one link, these enterprises will use the tools they have to adjust and distribute profits among industries. Qin Hao said at the meeting.

It is understood that PX project has a long construction cycle, a large investment scale and a high access threshold; polyester fiber project has a shorter investment construction cycle, a smaller investment scale and a better profit, polyester new capacity can reach production faster. The characteristics of industrial investment determine that there will be mismatches during the adjustment of supply and demand in the industrial chain, which will lead to uneven profits. In fact, in the PX-PTA-polyester industry chain, profit distribution is closely related to the supply and demand pattern of each link and the upstream and downstream game of the industry chain.

“In the situation of shortage of supply, PX has considerable profits, enjoys the mismatched dividend of production capacity, PX sellers have the pricing power, PTA profits are always on the profit and loss line, and the factor restricting PX price upward is that the downstream tolerance of raw material cost reaches the limit level. Since September 2018, PTA industry has improved in terms of supply and demand, PTA profits have moved as a whole, PX seized the opportunity to occupy profit space, and profit space has increased. Qin Hao said that based on the deduction results of the profit background in 2018, the situation of PTA de-inventory in 2019 is difficult to reverse, and the corresponding profit level should gradually rise. Under the background of low inventory, PTA manufacturers have strong bargaining power, grasp the initiative of profit distribution in the industrial chain, and most of the profits brought by cost collapse should fall in the PTA factory link. The same profit background deduces that in the second half of 2020, when the monthly output of PTA new devices reaches more than 400,000 tons, profits will begin to decline.

In view of the future investment opportunities of PTA, Shen Ye, senior analyst of Yongan Futures PTA, said at the meeting that although the absolute price is difficult to speculate, there are more relative price opportunities. “Overall, PTA is in the upstream and downstream capacity expansion cycle, so industry profits are expected to expand, looking forward to this year’s processing fees; monthly PTA industry attributes and contract design particularity, the superimposition of its industry environment, set as a probability event; and absolute prices, after a sharp fall in 2018, speculative demand or weakening in 2019, but due to convergence Ester and weaving are still in the capacity expansion cycle, and the replenishment cycle has not yet ended, so there is still a pulse market stage. He said.

After a decline of about 10 days on April 12, urea rose again after a decline of about 70-100 yuan/ton, which exceeded the expectations of most industry insiders. Especially, a factory in northern Jiangsu increased by 80 yuan/ton in just four days from 12 to 15. Is there any feeling similar to the last ten days in late March? Do you feel that all factors in the market are not enough to pull up?

How will the urea market end when it lags behind and rises again?

First of all, the plan can’t catch up with the change, and the market has a little variable again. The price reduction started on April 2. The urea manufacturers’surface quotation did not drop much. The actual turnover fell very fast. Some large agricultural companies were a little panicked. They still had some high-priced goods not in place. What’s more, let’s talk about selling them? Therefore, the symbolic receipt of some new orders while lowering prices has brought new support to urea manufacturers’prices. However, when the high-priced goods in the hands of large agricultural companies are digested, they may no longer take new orders and delay for a month and a half, which should bring new low prices to urea manufacturers.

Secondly, there is still support for industrial demand. The starting rate of compound fertilizer enterprises has risen rapidly. On the one hand, through the increase of urea price in more than a month, especially in Nabor in late March, the compound fertilizer enterprises have increased their sales promotion or continued to sell at a low price. The stock of finished products in their hands has been digested a little faster. In the last wave of spring market, the more production points are a little bit, the more sales points are a little bit, win-win with urea manufacturers, and give urea manufacturers this. The second price increase brought necessary conditions. However, fertilizer production in spring is the end after all. Fertilizer production in summer is a little early. Industrial compound fertilizer enterprises, power plants and plywood factories temporarily digest the previous products and raw materials. Compound fertilizer enterprises should not blindly accept high-price urea. Moreover, some compound fertilizer enterprises will soon convert to high-phosphorus and high-potassium fertilizer, and will not blindly support urea price increase.

Thirdly, there are slightly optimistic expectations in terms of exports and imports. International urea prices have risen for two weeks in succession, although the increase is not significant, but it gives some confidence to Chinese urea manufacturers. Industry insiders also realize that the impact of imported urea is not significant. The imported Iranian urea that arrived at Zhenjiang Port on April 9 is still not much news. The panic of small and medium-sized distributors, or the psychology of early selling, is not so strong. The next importers of urea arrived in Hong Kong in May or even June, so there is no need to pay attention to it for the time being. India won only 372,000 tons of urea in the tender on April 3. New tender may be held at the end of April and May. At that time, the international urea price or another step may bring some opportunities for China’s urea export. Even if it cannot be exported, it can avoid the excessive amount of imported urea flowing into China’s market.

Finally, the psychological tug-of-war between buyers and sellers is temporarily dominated by sellers, or the one with sufficient funds. Although the urea start-up rate is high, it does not affect the market quickly. Although the urea manufacturers’price is 200-300 yuan/ton higher than the cost line, it also fails to prevent speculation among some professionals. This price increase is nothing more than once again confusing everyone’s vision, building up everyone’s psychological bottom price, so that a small number of people in need once again bear high prices.

In short, the positive factors are too difficult to find, the price increase is very delicate!

To sum up, we should continue to adhere to the original point of view. Without the intervention of policy or unexpected factors, the ex-factory price of urea is still reasonable at the price of 1800-1900 yuan/ton, and it will climb another 100-200 yuan/ton during the peak period of summer market. Ten thousand steps back, if prices continue to rise for a period of time, it will be too late to take urea for the end fertilizer demand in June, let alone for the more concentrated demand for urea in topdressing is still early. Recently, we need to observe the trend of urea prices more before making purchasing decisions. A good result can be achieved only when the purchase is made in good time.

On April 14, the phthalic anhydride commodity index was 64.72, unchanged from yesterday, down 46.13% from the peak of 120.13 points in the cycle (2012-02-28), and up 33.66% from the low of 48.42 points on January 21, 2016. (Note: Period refers to 2011-09-01 to date).

Recent domestic market price trend of phthalic anhydride has declined slightly, the market of phthalic anhydride and phthalic anhydride in eastern China has weakened, downstream factories have just needed to purchase, factory inventory pressure has continued, high-end transactions have been blocked, the mainstream of on-site neighbouring source negotiations is 6500-6600 yuan/ton, and the mainstream of naphthalene source negotiations is 6300 yuan/ton; the mainstream quotation of phthalic anhydride market in North China is 6400-6600 yuan/ton, with the main market weakness The quotation trend of enterprises has slightly declined, downstream construction is not high, purchase on demand is the main, wait-and-see mentality is strong, domestic phthalic anhydride plant operation is stable, phthalic anhydride spot supply is normal, the market is not good, phthalic anhydride prices continue to decline.

Recently, the executive price of the upstream product of phthalic anhydride, Sinopec o-phthalic anhydride, is 6700 yuan/ton. The actual transaction price in the market is 6700 yuan/ton. The quotation is stable and the port market is general. The upstream raw material mixed xylene price is stable, the turnover of phthalic anhydride is general, the stock of phthalic anhydride in port is low, the price of phthalic anhydride is temporarily stable, the cost of imported phthalic anhydride is rising, the actual transaction price is discussed in detail, the upstream price trend is stable, and the market price of phthalic anhydride remains weak. DOP prices in the downstream are lower. Recently, in the DOP market in Zhejiang, merchants’quotations have maintained 8200-8300 yuan/ton, while downstream prices have slightly declined. Demand for upstream phthalic anhydride is limited, and the market price of phthalic anhydride is slightly lower. It is expected that the market price of phthalic anhydride in the later period will be around 6550 yuan/ton.

On April 14, the PX Commodity Index was 67.20, unchanged from yesterday, down 34.38% from its peak of 102.40 points in the cycle (2013-02-28), and up 47.53% from its low of 45.55 points on February 15, 2016. (Note: Period refers to 2013-02-01 to date).

Recently, the domestic market price trend of p-xylene has been temporarily stable. Pengzhou Petrochemical Plant has been running steadily in the field. Urumqi Petrochemical Plant has started 50% of its operation. Fuhai Aromatic Hydrocarbon Plant has started a line. CNOOC Huizhou Refinery and Chemical Plant has been overhauled. Hengli Petrochemical PX Plant has been put into operation. Other units have been running steadily for the time being. Due to the increase of domestic market supply of p-xylene, the market for p-xylene has increased. Price trend is stable for the time being. The opening rate of PX plant in Asia is about 80%. On April 12, the closing price of p-xylene in Asia increased by 3 US dollars/ton. The closing price is 1049-1051 US dollars/ton FOB in Korea and 106 8-1070 US dollars/ton CFR in China. More than 50% of the domestic units need to be imported. The rise of foreign prices has a positive impact on the domestic market price of p-xylene. The price trend of p-xylene in the market is temporarily stable.

On April 12, the price of WTI crude oil in May rose to $63.89 per barrel, an increase of $0.31. Brent crude oil in June rose to $71.55 per barrel, an increase of $0.72. The trend of crude oil price rose slightly, which provided some cost support for the price of downstream petrochemical products. The price trend of paraxylene market was temporarily stable. Recent textile industry market shocks, PTA price trend shocks on the 15th day, the average price of East China bid in the vicinity of 6700-6800 yuan/ton, as of 12 days domestic PTA start-up rate is about 80%, polyester industry start-up rate is about 90%, downstream production and sales rate maintained high, but PTA market price changes little, it is expected that PX market prices will remain stable in the later period.

After entering April, urea prices in the Central Plains have been adjusted appropriately with the decrease of demand and the increase of supply. Recently, urea factory prices in Lianghe and other places have dropped below 2000 yuan (ton price, the same below). It is rumored that Shanxi’s low price transaction has dropped to a little higher than 1900 yuan, but the overall receiving prices in the Northwest, Southwest and Northeast regions are slightly higher than those in the earlier period. There has been an increase, such as the quotation of some factories in Xinjiang has been screamed to more than 1800 yuan, the export price of high-end brands in Yunnan has also been more than 2200 yuan, and the arrival price of Heilongjiang market has also risen to more than 2200 yuan. At present, the urea market demand around the Central Plains has come to an end, but the domestic demand in some regions still exists, and prices are staggered. The downstream traders also have some difficulties in purchasing urea: are they picking up or temporarily on the sidelines? The author discusses this issue with the industry and draws the following conclusions: urea still has a certain risk of slipping in the near future, and procurement still needs to be cautious, mainly in the following aspects:

Firstly, the overall operation of the enterprise is relatively high. Recently, with the gradual resumption of production of gas head urea enterprises, although some enterprises have also entered the state of overhaul, according to the statistics of China Chemical Fertilizer Network, the actual daily output of urea in China is still more than 150,000 tons, and some overhaul enterprises are about to resume production, while most large plants have no plan for overhaul, the overall supply pressure is gradually increasing, and some industries are expected to be around the end of April, urea Overall supply may exceed 160,000 tons, and historical data over the years show that when the overall production of urea exceeds 155,000 tons, the overall price is relatively likely to decline.

Secondly, the market demand is not urgent. Recent spring market orders are almost at the end. Although the summer fertilizer market mainly uses high nitrogen fertilizer, most downstream compound fertilizer plants are not in a hurry to purchase at present. On the one hand, there are still low-price orders to be issued in the early stage. Compound fertilizer enterprises are not short of stock in the short term. On the other hand, the current urea price is still on the high side. In order to avoid risks, some enterprises are still offering high prices. The urea industry only takes a stand-by attitude, waiting for the urea market to stabilize; and the export side is because the domestic price is relatively high, at least at this stage, the domestic urea export is temporarily hopeless, under the background of high start-up rate, urea price or there is a certain risk of decline.

In addition, the demand of plywood factories and recent markets in northeast, northwest and southwest can not last long. The agricultural market will end before May, and the demand of plywood factories is out of gear. Some industries are expected to be the most prosperous when the enterprises have completed the execution of the orders in arrears, the price will decline further.

In summary, recent urea demand reflects slightly. Although some factories have done enough to meet the tense demand atmosphere, the downstream market is still relatively small. It is expected that the overall price of urea in the near future is stable and weak, and there is still a certain downside risk.

Although the spot supply of PTA will turn loose after this round of equipment overhaul, the production cost will gradually rise under the influence of rising crude oil prices. Inventories of ethylene glycol in East China continue to rise, and the forward price of ethylene glycol is weaker than PTA when the spot price can cover the production cost. The spread between PTA and Ethylene Glycol 1909 is expected to continue to widen.

The explosion of Xiangshui Industrial Park in Suzhou has a great impact on the dye market. Under the influence of cost pressure, printing and dyeing enterprises began to reduce the purchase of upstream grey cloth. According to the data of grey cloth inventory of sample enterprises in Shengze area, the progress of grey cloth inventory of degraded grey cloth began to slow down at the beginning of March. The stock of grey cloth has risen from the recent low of 34 days to 35.5 days, and has not entered the rapid degrading stage as in the same period over the years. With the passage of time, the impact of the incident on the textile and chemical fibre industry has been conducting upward and downstream, and the production peak in September this year is expected to be significantly affected. The demand for PTA and ethylene glycol will continue to weaken in the second and third quarters.

Late March to mid-April is the first round of PTA equipment centralized maintenance time of this year. At the same time, under the condition of low inventory, PTA manufacturer’s intention to exert influence on market price by adjusting equipment maintenance gradually appears.

Recently, PTA social inventory began to flatten. According to the latest data, PTA social inventory is 2.5 days, at a normal level. With the end of the centralized overhaul period, the stock boost to PTA prices will gradually weaken. Relatively speaking, the inventory scale of ethylene glycol has been rising since it entered the storage phase in September, 2018. The latest inventory in East China has reached 1.16 million tons. Assuming that the output of polyester is 50 million tons in 2019, the corresponding consumption of ethylene glycol is 16.75 million tons. According to the degrading rate in 2014, it takes nearly three months for inventory to be degraded. Taking into account the current apparent consumption of 15 million tons per year, the process of ethylene glycol inventory degrading will be very long, and inventory pressure is much higher than PTA. Recently, crude oil prices have risen sharply, WTI has stabilized at $64 and Brent has broken through $70, which has significantly boosted the cost of chemical products. The price difference between crude oil and PX has continued to fall from the high level since the beginning of March, but with the weakening of PX price in March, the price difference between PX and PTA oscillates upwards, which is higher than the same period. Recent PTA processing fees have fallen. In the long run, it is expected that PTA profits will continue to transfer to PX, and the cost support for PTA prices will gradually increase. Although the loose spot supply will put pressure on PTA price after the maintenance period is over, the reduction of processing fee will gradually increase the support of cost to PTA price.

In the aspect of ethylene glycol, the price difference is not the same under each process. But overall, the profits of oil and gas ethylene glycol manufacturers are very thin. The price difference of naphtha route has approached zero axis, the price difference of ethylene route has remained near – 1100 yuan / ton, and the price difference of MTO route has weakened to – 1000 yuan / ton. In contrast, the full cost of coal-to-ethylene glycol is still lower than the spot price. According to the annual report data of listed companies producing ethylene glycol in 2017, the total cost of coal-based ethylene glycol is estimated to be around 4300 yuan/ton considering depreciation. If depreciation is not considered, the unit cost of coal-based ethylene glycol is even as low as 3500 yuan/ton. Relatively speaking, lower market prices are more conducive to these coal chemical enterprises to occupy the market. Considering the production cost of each route, the price support of ethylene glycol will remain weak in the second and third quarters.

In 2019, downstream polyester industry demand for raw materials is expected to weaken. Considering the trend of PTA and ethylene glycol inventory differentiation and the difference in cost-side support between them, the price gap between PTA and ethylene glycol will continue to widen until September. Technically, the spot price difference between the two is near the average value of nearly ten years, and there is a large space for the spread to expand. The opening of continuous trading makes the trading time of the two varieties coincide highly, which is more conducive to the operation of arbitrage trading. Overall, the profit margin of long PTA and ethylene glycol in 1909 contract is larger.

The price of potassium sulphate water salt is relatively low, Mannheim is stable and high; the current 50% water salt powder market trade transaction mainstream 2600-2650 yuan/ton, Mannheim 50% Fanjilu mainstream factory price 2750-2800 yuan/ton, the actual transaction is a single agreement. Resource-based national investment in potassium 52% of the regional trade out of the warehouse about 2850 yuan/ton, the overall supply is sufficient, the mindset of the business is stable.

The overall trend of domestic potassium sulphate market is relatively stable, the production of Luo Potassium plant is normal, and there is no specific time schedule for summer overhaul plan. At present, the official quotation is stable. The market price is more than 2800 yuan/ton, and there is no new adjustment.

Mannheim potassium sulphate plant is still operating at more than 50% and shipments in the northern region are slightly better than those in the south. Therefore, some northern manufacturers have raised their quotations slightly, ranging from 50 yuan/ton to 2 750-2 850 yuan/ton for 50% of the milled powder and from 2 900 to 3 000 yuan/ton for 52% of the milled powder. Actual transactions are mainly based on orders and orders.

International Energy (IEA) released its monthly crude oil market report on Thursday (April 11). The report shows that global oil markets are tightening as oil supplies in the Organization of Petroleum Exporting Countries (OPEC) countries decline, but warns that oil demand may be reduced because economic growth is threatened.

As Saudi Arabia and its partners cut production and Venezuela and Iran’s exports were squeezed by economic and political crises, global oil supply fell by 340,000 barrels a day in March and crude oil stocks are expected to fall for the rest of the year, according to the monthly report. But it warned that the threat of a global economic downturn from Europe to emerging markets could have a negative impact on fuel demand.

“As we enter the second quarter of 2019, there are signs of tightening in the oil market, but we see mixed signals about demand prospects,” said the IEA, which provides energy advice to most major economies. Demand risk is “in the downward trend at present”.

Brent’s crude oil price has risen by more than 30% this year and is trading at more than $71 a barrel as Saudi Arabia leads OPEC and its allies in production cuts. However, the International Monetary Fund (IMF) predicts that this year will be the weakest year for global economic growth since the financial crisis a decade ago, and concerns about global economic growth have limited the rise in oil prices.

In its monthly report, the IEA said Venezuela’s oil production fell to a long-standing low of 870,000 barrels a day as a result of U.S. sanctions and power outages. “The collapse of the economy, corruption and poor management, together with the recent sanctions imposed by the United States, have severely damaged Venezuela’s oil industry, and the blackout has worsened the situation.” Production fell by 270,000 barrels a day from the previous month, creating the second largest decline in the country’s history, a decrease of 600,000 barrels a day from the same period last year.

Venezuela’s exports fell sharply as Saudi Arabia’s output cut more than expected. OPEC output fell sharply again last month, falling by 550,000 barrels a day to 30.1 million barrels a day in March, and global oil supply declined. The IEA said supply growth outside OPEC would also slow sharply as Canada cut production and North Sea production suffered a decline.

Owing to OPEC’s production restrictions, inventories in developed countries were below their five-year average, falling for the first time in four months in February. Nevertheless, the IEA warned that the demand outlook was shadowing.

Demand risk

The IEA said global crude oil demand growth in 2019 was expected to remain unchanged at 1.4 million barrels per day, supported by robust growth in demand in China and India, but it raised some potential risks.

Consumption in developed countries fell for the first time in the fourth quarter since 2014. In addition, the IEA said it was concerned about the ongoing trade dispute between China and the United States, that demand recovery in the Middle East remained “moderate” and that the economic situation of European countries could deteriorate, and that the situation would be even worse if Britain left the EU in disorder.

The downside may also come from rising oil prices, which are now at $70 a barrel, which are more uncomfortable for consumers than they were at the beginning of the year.