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SunSirs: Fundamental Bearish, Chinese PTA Hits Record Low in Nearly Ten Years
March 24 2020 08:55:53SunSirs(Linda)

According to the price monitoring of SunSirs, the domestic spot market price of PTA continues to fall. As of March 23, the average market price was 3,454 yuan / ton, down 18.64% from the beginning of the month, and down 47.46% year-on-year, a record low in nearly 10 years.

Intensification of PTA plant equipment overhaul. Pengwei Petrochemical's annual output of 900,000 tons of PTA units was shut down at night on March 9. It is expected to overhaul for one month. Hengli Petrochemical's 2.2 million-ton PTA unit began maintenance on March 12th, with planned maintenance of about 15 days. Dushan Energy's 2.2 million-ton PTA unit entered parking maintenance on March 15th, and is expected to be repaired for 15 days. Luoyang Petrochemical, Tianjin Petrochemical, Shanghai Petrochemical and Hanbang Petrochemical have not yet run at full capacity. The downstream polyester gradually recovered, but the PTA destocking speed was slow. Only in January-February, PTA's social inventory accumulated more than 1.5 million tons, and the overall social inventory reached more than 3 million tons, which was a historical high of nearly 5 years. The contradiction between supply and demand in the market was still prominent.

International oil prices closed down, dragging down chemical product costs and market sentiment. The downstream polyester unit was restarted, and the comprehensive load was increased to 82.43%. With the introduction of the resumption policies and government support policies in various places, the start of polyester production in March showed a slow upward trend. However, in terms of price, due to cost dragged down by the mainstream polyester filament factories in Jiangsu and Zhejiang, the quotation of the major polyester filament factories fell sharply. As of March 23, the average price of polyester POY150D / 48F market was 5,894 yuan / ton, down 14.38% from the beginning of the month. The terminal textile market is cautious and wait-and-see attitude. Many companies indicate that large orders are missing after the start of construction, the number of orders has been significantly reduced, and the willingness to purchase remains weak.

Business analysts of SunSirs believe that due to the rapid decline in costs and the suppression of supply and demand, it is expected that the PTA spot market market will be at an inflection point early, or enter a period of low volatility in the game of high inventory and recovery of polyester demand. With the recovery of demand, Downward space is expected to narrow.

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