PTA Aftermarket Road Will be Tortuous for Its Supply and Demand Contradiction
Author: Nov 03, 2011 15:59
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168tex News: By far, PTA price is still in a trend and it is forecasted that in a long time, PTA will keep its down trend. But in the rest time this year, its price change may be quite different from what was in the first half of the year, mainly fluctuating repeatedly, and its price down road will be relatively tortuous.
More supply and demand contradiction will appear.
Currently, PTA device operation rate is close to the full load level, with a stable output domestically, while its importation inched continuously. In September, importation of PTA (including QTA) was over 620 thousand ton, which surpassed the level in the same period of the previous years. In Sept and Oct, imported goods profit margin increased, turning from deficit to gain, and it is estimated that importation in Oct will be at a high level. In general, China PTA supply stably goes up, while its demand is gradually reduced. Recently, as CCF reported that, the downstream weaving plants are suffering from a tight budget for the high stock amount that may probably lead to bankruptcies. Some enterprises have production reduction plans, and see from the recent loom operation in Jiangsu and Zhejiang provinces, which has dropped from 72% to 70%, indicating the downstream production reduction has began. The low demand in the weaving chain has directly lead to a low production and consumption rate of poly yarn, and also its stock amount rebounded, which has been notably manifested recently. Among which, inventory of staple fiber has rebounded to two weeks, and the filament yarn inventories are also high. Although the shortage covering in the two days may ease the inventory pressure to some degree, in the long run, the situation will be continued. When poly yarn stock amount was piled up to some level, and without the turning point, then polyester enterprises may have to lower down its operation load. Now the busy season of textile and clothing industry has come to the end, and it is probably that the industry winter will come in advance. Therefore, PTA will suffer from a pressure that comes from the supply and demand aspect, and its price is probably to be down for the high pressure.
Increasing Uncertainty on the Macro Aspect
In the end of Oct, the EU summit has passed the Greece rescue plan. But on 1st Nov, the Greece prime minister announced to hold a referendum on this agreement. And the referendum may be held in January next year, which will bring about a great uncertainty over the European debt control, especially aggravated the worries over the increasing loan cost. The intervention in the currency market of Japan has reached a recorded level of 10 trillion yen, leading to a new peak of the dollar against Yen rate. The macro aspect is overwhelmed with negative factors, and the launch of the EU rescue plan has indicated the determination to solve the Euro zone debt problem. See from a long run, the worst time may has gone, and the future macro negative influence may still exists, but positive factors may come temporary, therefore, commodity price should be fluctuate downward.
Pay attention to the possible positive factors.
See from production capacity, 2011~2013 are the low ebb period of PX capacity expansion, while it will be a stage of fastigium of PTA capacity expansion. Therefore, domestic PX supply will still be a key factor. This year, the spring festival will come ahead to January. And there is a stock up demand of the downstream enterprises. If the market speculates on PX supply, then its price may rebound. In addition, the invoice needs may also boost the activeness of enterprises to stock up. This is the potential positive factor of PTA market. But whether these two factors will boost the future’s price, it is still uncertain.
To sum up, in a period of the coming future, PTA fundamentally will be negative for a weak demand, but its price down road may be tortuous, accompanied with rebounds in different degrees. And the rebound force mainly comes from the positive macro aspect. Moreover, the tight supply situation of PX may be the market focus in some time, once again triggering on the cost boost price up situation. Therefore, PTA trend in the future is generally negative. But market players should still focus on the movement of PX market, making good decisions according to the macro situation.
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Editor: Candy From: 168Tex.com
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