PTA Drop Space will Gradually be Opened

     After the consolidation nearly one month at 10,000 Yuan point, PTA price finally fell last week in mid-September, and it dropped nearly 1,000 Yuan last week. With the sharp decline in futures prices, the market fundamental was gradually weakened, and the PTA drop space will gradually be opened
     PX Faces Adjustment
     As the PX expansion of production capacity is slower than PTA, the market hyped dramatically the supply of PX, and PX prices rose in response, and it produced strong cost to PTA. However, the bullish factor gradually digested by the market, and the speculation enthusiasm was weakened. From the supply and demand perspectives, PX domestic supply is tight really, but the PX import volume reached 460,000 tons in August, while domestic PTA plant devices maintenance was continuous, and the PX supply can meet the market needs overall. After two months of hype, PX prices have risen to historic high level, so the downside risk is also increased. While lower crude oil price will undoubtedly impact PX price, PX market may face adjustment..

    After the mid-autumn day, the polyester yarns production and sales gradually declined in Jiangsu and Zhejiang market, and the polyester factories average stocks increased slightly and currently major are for 1-2 weeks. The overall stocks are in the middle level, and the DTY stock is higher. Since the general decline in the futures market, PTA price sharply dropped and downstream stocking became more cautious. If the polyester production and sales situation will be not good, the polyester stock may increase after the holiday, and lead to some selling pressure. Last week the polyester factories have already start to cut prices. The weak production and sales situation reduced the endurance capacity of polyester plants to the growth of raw material price, thus it restricted the PTA price. 

    In addition, the sales peak period of “gold September and silver October” expected by the textiles and apparels market has already gone a half, but the overall load of national has begun to decline, so a part of the downstream business stock pressure is big, and follow-up orders situation is not optimistic. Many companies choose to stop production in the National Day holiday; it will directly reduce the demand for upstream raw materials. Overall look at the terminal situation is very weak, and the pressure may gradually transmit through the industry chain to the upstream.

    After the discussion interest meeting of FED, the result is basically in line with market expectations, which failed to boost market confidence. Standard & Poor's corporation announced that the Italian long-term sovereign debt rating was lowered one level, dropping from level a+ to a, maintaining a negative outlook. Later, Moody reduced the debt rating level of Bank of America, Citibank and WFC, then cut the long-term deposit rating for two levels of 8 Greece Bank, announced long-term deposit and debt rating outlook of all the was negative. The global economic situation is deteriorating, the stock market and commodities continue to fall, and a "double dip" sign has appeared. On the one hand economic slowdown will directly through the financial market crackdown the PTA price, on the other hand the demand for textiles and clothing will also be affected, thereby indirectly restricting PTA price. 
    Although before the decline of this time, PTA market fundamentals remained strong, and the price also tried to bounce in the drop process. However, the systemic risk has surpassed PTA bullish fundamentals, and turned fundamentals weakened in advance. The PX price may start to adjust, and the downstream demand is slowing, so the terminal pressure will gradually transmit to the upstream, and fundamentals may continue to deteriorate, and PTA drop space will gradually be opened. From the technical point of view, currently the PTA market has entered the C wave, and it is more likely to continue to oscillate in the afternoon market.