PTA: Limited upside in this round

　　Since hitting a low point in late July, the purified terephthalic acid (PTA) market has recently ushered in a strong rebound and rising market, with the average price breaking through the 6,000 yuan (ton price, the same below) mark, with an increase of more than 6%
.
As of August 8, the PTA market reference price was 6,155 yuan
.

　　Industry insiders generally believe that the recent overhaul of some PTA devices has led to a reduction in market supply, while a slight rise in terminal demand has driven PTA prices to rise
.
However, under the expectation that new production capacity will be put into production one after another, this round of PTA market rally may not be sustainable
.

　　Cost rises oversold rebound

　　In late July, the price of PTA reached a stage low, and after a brief shock, it quickly rebounded, driven by the upward price of upstream crude oil and paraxylene (PX), with an increase of 6.
4% in two weeks
.

　　Since the beginning of this year, crude oil prices have continued to run at a high level, and PTA cost support has been strengthened.
In addition, the increase in factory maintenance and the improvement of terminal demand have pushed up the price of PTA
.
On June 8, the average market price of PTA reached 7,726 yuan, a year-on-year increase of 65.
2%, and was at a three-year high
.

　　However, after an integer number of days from the high price, the PTA market switched to a state of deep decline under the combined effect of the pressure on upstream oil prices, the decline in the PX market and the weakening of downstream demand
.

　　"As the Federal Reserve raised interest rates by 75 basis points more than expected, disturbed by macro negative disturbances, expectations of setbacks in demand put pressure on oil prices
.
At the same time, with the increase in PX supply and the end of staged speculation, PX prices fell sharply
.
In addition, the load of terminal weaving equipment was reduced.
, the factory's willingness to stock up is not strong.
In the case of weak demand, PTA social inventory is in a state of accumulation, and the price begins to decrease
.
On July 20, the price of PTA fell to 5784.
17 yuan, reaching a stage low, down from the high point of the year 5.
14%
.
" said Xia Ting, an analyst at the business club
.

　　In late July, international oil prices were still in a stalemate between long and short positions.
Although the market was still worried about the Fed's aggressive interest rate hikes, oil prices were supported and PX rose due to concerns about tightening supply and a weakening dollar
.
The superimposed PTA circulation spot is relatively small, which forms a positive support for the PTA market
.
The PTA market began to bottom out in late July, and the current average price is 6,155 yuan
.

　　Short-term supply and demand margins improve

　　Regarding the recent trend of the PTA market, people in the industry generally believe that under the circumstance of reducing the burden of equipment maintenance, the market supply has shrunk, while the downstream polyester demand has a positive trend month-on-month, and the operating rate of terminal looms has increased month-on-month
.
On the whole, the short-term PTA supply and demand margin is improving, forming a strong support for the market
.

　　In terms of supply, the PTA industry plans to add about 5 million tons/year of maintenance capacity in August
.
Judging from the current news, the two sets of Hengli Petrochemical's total 4.
4 million tons/year and Yizheng Chemical Fiber's 650,000 tons/year have maintenance plans
.
In addition, Yisheng Dalian's 2.
25 million tons/year plant load dropped to 60% at the end of July, and Fujian Baihong's 2.
5 million tons/year PTA plant load dropped to 80% at the end of July
.
In addition, under the current low processing cost, it is not ruled out that there are PTA devices temporarily undergoing unplanned maintenance
.
On August 3, the operating rate of the PTA industry was 66.
49%, down 11.
9 percentage points from the previous month
.
The overall supply of PTA market is shrinking
.

　　In terms of demand, due to the joint production reduction of polyester filament manufacturers and the profit distribution of upstream links in July, the terminal order situation has improved, and the cash flow has improved.

.
At present, the operating rate of the polyester industry is 80.
61%, an increase of 3.
01 percentage points from the previous month
.
The operating rate of the terminal weaving industry also increased slightly.
The operating rate of Jiangsu and Zhejiang looms was 56.
27%, an increase of 4.
82 percentage points from the previous month, which formed a positive support for the PTA market from the demand side
.

　　However, from a macro point of view, the background of long-term weak consumption is difficult to change for the time being, and terminal demand may be under pressure
.
At the same time, the market supply of the currently overhauled PTA unit will resume soon after the resumption of production, and the production capacity that has not yet implemented the annual overhaul plan is not much, and there will be supply pressure to increase the operating rate in the long run
.

　　New production capacity releases pressure

　　"The release of new production capacity in the later period will also put a certain pressure on the PTA market
.
" Xie Wen, senior analyst of the aromatics industry chain of Zhongda Futures, believes that in the second half of this year, PTA's new production capacity will be under great pressure
.
From the current point of view, the new capacity of PTA in the third quarter is estimated to be 5 million tons/year, and the new capacity of PTA in the fourth quarter is estimated to be 7.
5 million tons/year
.
The 6# and 7# units of Hengli Petrochemical are expected to release a total capacity of 5 million tons/year in the third quarter, the 2.
5 million tons/year unit of Weilian Chemical is planned to be put into operation in October, and the 5 million tons/year unit of Tongkun Jiatong Petrochemical is planned to be put into operation in October.
put into production in the fourth quarter
.

　　If the new plant is successfully put into operation in the second half of the year, the PTA production capacity will reach more than 80 million tons per year, an increase of 18.
44% year-on-year
.
However, it is not ruled out that under the pressure of cost, the production and storage of new devices may be delayed, and the existing devices may be maintained at a low load state
.

　　In terms of downstream polyester, it is expected that a new plant with an annual production capacity of about 4 million tons is planned to be put into operation
.
For example, Xinjiang Zhongtai 250,000 tons/year polyester filament plant, Jixing Chemical Fiber 300,000 tons/year differentiated staple fiber plant, and Tongkun 600,000 tons/year polyester filament plant will all be put into operation in the fourth quarter
.
However, relative to the new capacity of PTA, downstream demand is still insufficient
.

　　On the whole, the fundamentals of PTA supply and demand in the short term are expected to be positive, but in view of the increase in market supply after the addition of PTA's new production capacity, the demand side is unable to digest it
.
With little change on the cost side, the PTA market may return to weakness in the long run
.