At the end of the year, the new PX production capacity of Zhejiang Petrochemical Co., Ltd. will arrive as scheduled, the PTA new plant is expected to be put into operation, and the downstream polyester market will enter into seasonal maintenance. In the context of lack of cost support and demand pull, PTA may weaken again.
PX new capacity launch
PX is the direct raw material of PTA, which is highly related to the price of PTA. This year’s massive production increase of PX has reduced PX manufacturers from huge profits to losses. From March to may 2019, the PX plant with an annual output of 4.5 million tons in two phases of Hengli was released successively, which increased the capacity by 31% compared with the end of last year, greatly reducing the domestic dependence on imports. The price difference between PX and naphtha fell to US $280 / ton in mid May, down 55% from US $617 / ton in early February. Although the PX plant maintenance support was provided in the middle of the year, and the PX processing fee slightly increased to the range of $300-350 / T, after the National Day holiday, with the 600000 tons of Sinochem Hongrun and the 1 million tons of new capacity of Hainan refining and Chemical Co., Ltd. gradually put into production, the price difference between PX and naphtha fell again below the cost line of $300 / T.
Recently, the annual production capacity of 4 million tons of PX of Zhejiang Petrochemical Co., Ltd. has been opened and half of it has been put into production recently. If it is put into production smoothly, the remaining capacity will be released soon. But at present, PX production has been in a loss state, and the increase of production capacity will increase the market supply pressure, so it is difficult to support PTA price.
PTA supply and demand contradiction deepened
Since 2019, PTA industry has entered the production increase cycle. Within this year, Sichuan Shengda 1 million tons and xinfengming 2.2 million tons of units have been put into production successfully. Hengli phase IV 2.5 million tons and Xinjiang Zhongtai 1.2 million tons of units will also catch up with the last train at the end of this year and put into production. At that time, PTA capacity growth will reach a high of 15%. The rapid increase of production capacity has greatly reduced the profits of the industry. PTA market has stepped from the prosperity in the first half of the year to the depression in the second half of the year. Recently, the spot processing fee has dropped to a low level below 600 yuan / ton.
At present, in addition to the maintenance plan of Hanbang and Sanfangxiang in Jiangyin, PTA device maintenance has been basically completed within the year, the market starting load is above 92%, and will continue to increase in late December. If two sets of new production capacity are released as scheduled in the near future, it will be gradually mass produced at the beginning of next year, thus aggravating the contradiction between supply and demand in the market.
Seasonal decrease in demand
After the expansion of production capacity in the first two years, the growth rate of polyester market output in 2019 is less than that of PX and PTA links in the upstream, but overall, the annual growth rate is still 6.7%. At the same time, the average operating load of polyester manufacturers is also at a high level of 87.8%. However, under the background of high production, the market prosperity gradually declined. Since the fourth quarter, polyester polyester cash flow has dropped significantly, of which polyester and FDY have been in a loss state for more than two consecutive months.
Due to the holiday of the downstream terminal weaving factory, polyester manufacturers usually conduct centralized maintenance around the Spring Festival. According to the maintenance plan announced so far, the maintenance capacity is expected to be 2.33 million tons in December and 3.36 million tons in January next year. With the end of the winter fabric purchase order, after the middle of December, the texturing and weaving factories will be shut down, and polyester warehouse will be inevitable. Under the background of increasing production in the upstream at the end of the year, polyester manufacturers dare not expect to stock up.
In a word, under the expectation of Zhejiang Petrochemical PX production increase and two new PTA production capacity put into operation, the PTA market supply pressure will increase at the end of the year, meanwhile, the downstream market demand will also weaken during the Spring Festival, and the PTA price may weaken again.