The PTA market in October showed an N-type trend of “rising, falling, and then rebounding”. As of October 29th, the average market price in East China was 7337 yuan/ton, an increase of 0.14% from the beginning of the month. In the first half of the year, crude oil rose due to geopolitical disturbances in the Middle East, coupled with centralized maintenance of PX facilities and the shutdown of multiple PTA facilities. The supply of spot goods tightened, and coupled with low social inventory, PTA quickly rose, with spot prices reaching a new high of over 7800 yuan/ton in nearly four years.
However, the upward momentum rapidly declined after the surge. As the geopolitical situation does not escalate significantly and crude oil prices fall from high levels, the high prices suppress downstream purchasing intentions. Polyester companies are cautious in pursuing price increases, and negative feedback from the industry chain is evident. As of October 22nd, the PTA East China spot benchmark price has fallen to 7050 yuan/ton, a decrease of 3.72% from the beginning of the month. From a fundamental perspective, the operating rate of the PTA industry has rebounded to about 68%, a significant increase from the low point in August, and there are expectations of a restart of inventory in multiple facilities such as Jiatong and Dushan, leading to a trend towards loose supply; However, the comprehensive load of downstream polyester is only 74%, the operating rate of weaving machines in Jiangsu and Zhejiang is 53%, and the feeding machine is 64%, both lower than the same period in previous years. The peak season of “Golden September and Silver October” is not fulfilling well, and the demand drag is obvious. PTA has entered a cumulative inventory pattern since September, with social inventory rising to 1.1 million tons, and the cumulative inventory trend is expected to continue in the fourth quarter.
Starting from the end of the month, the decline in PTA has slowed down and shown a slight rebound, mainly supported by: firstly, PTA processing fees have fallen from over 800 yuan/ton at the beginning of the month to around 400 yuan/ton, resulting in a significant compression in valuation; Secondly, the reduction of raw material profits has led to a significant recovery in polyester profits. The profits of long fibers, short fibers, and bottle chips have all improved, and the willingness of factories to increase their burden has increased. The polyester load is expected to rebound against the seasonal trend in November, and the accumulated inventory may narrow; Thirdly, PTA’s absolute inventory is not high.
Analysts believe that overall, PTA is likely to maintain a high and wide range of fluctuations in the short term, with limited room for deep declines. The positive factors come from the premium of crude oil and PX costs, as well as low inventory support, while the negative factors are concentrated in weak terminal demand and inventory accumulation cycles. In the future, special attention should be paid to the disturbance of the Middle East geopolitical situation on oil prices, the pace of PX and PTA plant restart, the recovery of Double Eleven orders, and the strength of polyester load recovery.
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