SunSirs: PTA Short-Term Weak Adjustment with High Inventory and Low Demand

According to the price monitoring of SunSirs, the price of PTA spot market in China has continued to decline since February. As of February 26, the average market price was 4,381 RMB/ton, down 10.33% from the beginning of the month, down 32.24% year on year.

Up to now, PTA's social circulation inventory has broken through 2 million tons, to around 2.265 million tons, an increase of about 500,000 tons compared with that before the festival, which has reached the high inventory level in the past four years. Basic PTA is affected by the contradiction between supply and demand in a short term. Some units take the initiative to reduce the load operation. At present, the overall operating rate has fallen slightly. The current operating rate of PTA is about 81%, but the overall operating rate is still high. Next week, Jiangyin Hanbang and Huabin Petrochemical have restart plans, so it is difficult to maintain high inventory.

In terms of cost, the U.S. crude oil inventory continues to increase, and the reduction of refined oil inventory is limited, which makes the overall oil price under pressure. The inventory pressure of downstream polyester plants, especially large ones, is still high. With the early overhaul of the epidemic turning better, some of the plants have been restarted one after another, and the operating rate has slightly recovered to around 62%, which may continue to increase in the future. The market sales situation of polyester FDY is better than that in the earlier stage. The quotation of mainstream factories in Jiangsu and Zhejiang is stable as a whole. Some factories intend to increase their prices. The current sales inventory is the main one. Textile enterprises all over the country have started to return to work in an orderly manner. The terminal textile industry has risen to 24%. Medium and large textile enterprises are willing to return to work, and the return rate is also high. However, due to the impact of cash flow shortage, epidemic protective equipment shortage and return of workers from other places, small enterprises are slow to return to work. At the same time, logistics has not been fully recovered, scale sales have not really started, and the overall demand release is slow.

At present, PTA plant is affected by the imbalance between supply and demand, the inventory backlog is more serious, the high inventory pressure is prominent, short-term reverse pressure PTA device load reduction. At the same time, the downstream polyester faces the problems of workers in place, logistics, and high inventory, as well as the progress of the recovery of the terminal textile enterprises. Fortunately, the logistics is gradually improving. In addition, local governments have introduced measures to promote the enterprises to return to work actively. It is expected that the downstream polyester load will significantly increase in March. Analysts from SunSirs believe that PTA weak adjustment is more likely in the context of short-term high inventory and low demand. With the continuous improvement of demand, the market will also improve.

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