Unnecessary to Worry About Afterward PTA Tendency

In recent times, commodities slumped across the board. PTA also cannot avoid dropping. There are three factors that could affect the tendency of PTA.

Ⅰ. Upstream Aspect: PX supply is in shortage.

When it entered the third quarter, PX devices’ accidents (e.g. fire in Huizhou Refinery of CNOOC; repeated fire in Formosa Plastics and Fujia Dahua Incidents) continued to happen, and operation is frequently heard to stop. From July to November, accumulative loss of effective PX capacity is around 1 million ton; so the PX supply is in shortage.

Ⅱ. PTA supply finally increased

In the next half year, monthly output of PTA increased to 1.5-1.55 million ton due to its newly-added capacity. Import volume of PTA was around 0.55 million ton in July and August; while monthly supply was around 2.1 million ton at home. Several plants (including Yangtze Petrochemical 350 thousands ton; Zhuhai BP 900 thousands ton; Shanghai Petrochemical 400 thousands ton) arranged to shut down PTA devices and have maintenance in the third quarter. The practical output of new capacities that had been put into operation haven’t fulfilled as a result of the frequent shut-down of those devices.

Ⅲ. Downstream market

Present condition of polyester manufacturers is good. However, the terminal weaving manufacturer began to have deficit and stop operation because of the twisted cost and unchangeable fabric prices. Storage of polyester manufacturers is low. The profit of polyester products is over 1,000 Yuan except FDY 150D products. This profit is acceptable if compared with it in the first half year. Whether the production-marketing can keep up depends on the situation of terminal weaving manufacturers.

At present, downstream orders increased compared with it of last month, but haven’t risen back to the normal level. Judged from the profit, continuously increasing cost suppressed the profit of weaving manufacturers. Although sales volume of fabric increased to some degree, the prices are still at the formal level. Some of the weaving manufacturers even reported deficit.

Considering upstream PX supply issues, forward PTA price may be suppressed to fewer than 10,000 Yuan. If this happens, PTA manufacturers would reduce purchase of PX in order to avoid the deficit. Therefore, even if PTA capacities were increased, the operating rate would still be uncertain due to the uncertainty of feedstocks purchase. As is mutually conditioned between operating rate and supply, if the downstream market entered busy season finally (because people is still expecting the coming of busy season), the price of PTA spot goods might increase instead; then the futures price also might be pulled up. Hence, it is not necessary to worry about the afterward tendency of PTA.