The PTA market continues to weaken

Since October, the purified terephthalic acid (PTA) market has turned into sharp decline mode
.
Starting from October 10, the average price of PTA fell by 495 yuan in just 3 days (ton price, the same below).

At this point, the upward trend
of nearly three months of volatility since late July ended.
On October 21, the reference average price of PTA market was 6054.
17 yuan, a decline of 5.
08%
compared with the beginning of the month.

Looking forward to the future market, industry insiders believe that under the fundamentals of loose supply and demand in the fourth quarter, coupled with the downward shift of the center of gravity of international crude oil prices, and weak cost support, the PTA market may continue to be weak.

Tight supply pushes the market higher

"Since late July, the PTA market has entered a new rally that lasted until the end of
the National Day holiday.
" Liaoning PTA dealer Ye Xiang believes that the main driver of this round of rally is the shutdown of the main large factories for maintenance, the market supply has contracted sharply, and the demand side support is acceptable
.
In the case of tight supply, factories are reluctant to sell, gradually pushing up PTA prices
.

According to reports, the price of PTA continued to fall in the early stage, the losses of production enterprises intensified, and the main factories began to stop work and maintenance in late July, such as Fuhai Chuang 4.
5 million tons / year, Yisheng Ningbo 2 million tons / year, Jiaxing petrochemical 1.
5 million tons / year equipment and so on have been stopped
one after another.
In addition, Yadong Petrochemical 700,000 tons/year and Yisheng Dalian 2.
25 million tons/year plant have reduced their burdens to varying degrees, resulting in the domestic PTA industry operating rate falling to about 67%, and the overall market supply decreased by 1.
47%
compared with the same period last year.

The inventory side is also in a continuous state
of destocking.
In early September, the weekly social inventory of domestic PTA has fallen to 1.
86 million tons, reaching the lowest level
of the year.
At the same time, the demand side also gives certain support and cooperation
.
With the alleviation of high-temperature power curtailment in the early stage, the operating rate of the downstream polyester and terminal weaving industries has rebounded significantly, and the phased replenishment demand of downstream factories has been released
.
Supply and demand combine to push up the
PTA market.

However, the substantial positive demand side has not been sustained
.
Recently, the downstream polyester industry production and sales performance is light, terminal orders are not as expected, the PTA market continues to be weak upward, and began to slightly shock and pullback
.
On October 10, the average price of PTA market was 6516.
67 yuan, a slight decrease of 3.
85% from the high point of this round of strong pattern, but still at the high level
of this year.

Cost loosening triggers a pullback

After the National Day holiday, international crude oil prices continued to fall, resulting in loosening
of PTA cost support.
The main plant began to adjust the price of shipments within the acceptable range of processing fees, resulting in a sharp decline
in PTA prices.

According to Ye Xiang, in mid-to-early October, crude oil prices continued to fall
.
On October 17, Brent crude oil and New York crude oil prices fell 6.
42% and 7.
59%
respectively from a week ago.
Due to the high PTA price at that time, the processing fee of the production plant was relatively considerable, which provided room for the PTA price correction after the cost support showed signs of loosening
.
The PTA market began to fall sharply from October 10, ending a strong pattern
that lasted for nearly three months.

Ye Xiang believes that the current macro level is still the main factor
affecting the trend of international crude oil.
At present, the downward pressure on the global economy continues, the Fed's interest rate hike trend has not ended, and the crude oil market is likely to fall later
.
Naphtha is supported by the limited cost of crude oil, under the influence of the gasoline and diesel market, ethylene cracking demand is weak, the overall market wait-and-see sentiment is strong, refinery shipments are weak, it is expected that the near future may be weak and sorted out
.
The centralized maintenance of paraxylene (PX) plants will be restarted at the end of the ceremony, while the planned new capacity of about 6.
4 million tons/year in the fourth quarter will be fulfilled
.
The supply side is loose, and the PX market is expected to remain weak and volatile
.

Loose supply and demand dominate weakness

"In the later stage, the supply and demand side will show a loose state, and the PTA market may return to the accumulation mode and continue to move forward
weakly.
" Qiu Qianqian, an analyst at Jinlianchuang Chemical, analyzed that on the one hand, the pre-maintenance and load reduction devices will be restarted and increased one after another, and new production capacity will be added, and PTA supply is expected to increase; On the other hand, terminal demand is acceptable in the short term, but it is not fundamentally positive in the medium and long term
.

On the supply side, as Yisheng has a number of units and Fuhaichuang's 4.
5 million tons/year plant to increase the load, the supply of PTA market will recover
compared with the previous period.
At the same time, the new plants of 2.
5 million tons/year of Weilian Petrochemical and 5 million tons/year of Tongkun are scheduled to be put into operation in the fourth quarter, when the overall supply of PTA will increase
significantly.

On the demand side, although the operating rate of downstream polyester and terminal weaving enterprises has rebounded, it basically maintains rigid procurement, mainly to complete the autumn and winter orders in the early stage, and the subsequent spring and summer orders have not yet been placed
.
At the same time, there is also a lack of good work on the export side
.
With the recession in Europe and the United States and the intensification of inflation, the current digestion of old orders is mainly to digest new orders, so the overall demand in the fourth quarter is difficult to be optimistic
.

On the whole, with the restart of maintenance equipment and the successive commissioning of new equipment, the medium- and long-term supply of PTA is expected to increase; However, the new orders of the terminal factory are weak, resulting in the downstream polyester factory still having the expectation of accumulation, and the probability of production reduction in the later stage is relatively large
.
Under the fundamentals of oversupply, the PTA market is expected to run
weakly in the fourth quarter.