The 16th China International Polyester Summit Forum was held in Shanghai recently. At the forum, more than 20 polyester-related enterprises and traders from home and abroad made in-depth analysis of the upstream and downstream products of the polyester industry chain.
Futures Daily reporters learned at the meeting that in the first half of the year, in anticipation of the decline in global economic growth, the domestic commodity market as a whole showed a trend of oscillation, crude oil volatility was more intense, and the PPI index continued to decline slightly. Profit distribution of polyester industry chain is shuffled again, PTA rollercoaster market again, and profits expand substantially in the case of tight liquidity. Under the influence of demand withdrawal, the profits of polyester products shrink significantly. MEG is “stagnating” in the face of huge production expectations. In addition to PTA, the other products in the industrial chain fell significantly in the first half of the year.
According to the data of China Fiber Network, PTA maintained high-load production under high profit in the first half of 2019, and its output growth rate reached 9.4%. With two rounds of large-scale production reduction of polyester in the beginning of this year and May, PTA stock accumulation degree was relatively high, and the accumulative increase of social stock nearly doubled in the first half of this year. In addition, the volume of imports increased under the high price of the inner plate, with imports growing by nearly 18% in the first half of the year.
“In the first half of the year, the import growth rate of MEG declined to 2.6% under the dramatic expansion of output growth, but the high inventory still drags down the absolute price, and the profits of MEG in all ways are very poor.” Zhao Cheng, head of polyester industry chain of medium-fibre mesh, said.
At present, the overcapacity of the polyester industry chain has been gradually alleviated, and the near future prospects are still fragile. R.D. Udeshi, president of the polyester chain of Sincerity Industries Ltd., India, said that compared with previous data, it was found that the profits of the industrial chain offset the impact of large price fluctuations and reduced the downside risk. Subversive capacity deviation will benefit the polyester industry chain in the next few years. PX, PTA and MEG will be adjusted in the future due to the increase of production capacity, and stable demand growth will support the operation of the device.
In fact, more market participants are pessimistic about the chemical industry. Jason Miner, senior analyst at Bloomberg Global Chemistry, argues that a slowdown in demand for chemicals is inevitable and that oversupply may exacerbate the decline in earnings.
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Some market participants believe that China officially opened the prelude of the year of refining and chemical industry in 2019, and a number of PX units are waiting to be put into operation. PTA will enter a new round of expansion cycle after 2019, which may become the last year of PTA low inventory. In 2020, PX is still in the peak period of production, PTA production capacity may usher in a major outbreak, and the number of new polyester production capacity is expected to remain at the level of 2019.
In this regard, Zhao Cheng said that the “integration” of PX-PTA industry chain will be further deepened, and the deepening of integration will also enhance the profitability of polyester factories. The concept of PX-PTA-polyester interests bundling is becoming increasingly solid, and the three links will enjoy a growth of overall profits.
Looking ahead to the second half of the year, Zhao Cheng said that in the case of trade friction eased, demand in the second half of the year will be in a slow recovery state, but orders flowing to Southeast Asia and other places from last year to now are temporarily irreversible. The growth rate of demand for polyester is expected to be 6%-7% for the whole year, and the growth rate of production is expected to be 9%-10% in optimistic circumstances. In the second half of the year, PX’s new capacity was put into operation at a slower rate than expected, and its profit enlargement and further withdrawal were likely to be smaller. The liquidity of PTA ensures that PTA is still a better multi-product in the chemical industry sector in anticipation of the increase of social reservoirs.