SunSirs: Influenced by Crude Oil, Chinese PTA Main Contract Lower Limit

Oil prices hit the biggest drop since the end of May. Brent prices dropped from a high of 77.84 to a low of 74.13, a huge intraday fluctuation of 3.7 US dollars, which made the market sentiment feel chills. The unsuccessful OPEC+ meeting and the disagreements among oil-producing countries in increasing production have led to uncertain prospects for the oil market and aroused market concerns. The crude oil market has "suddenly braked". Affected by this, PTA's main contract has a lower limit, with a decrease of 5.02% and closing at 5108 yuan/ton. The spot market followed the decline. According to the price monitoring of the business agency, as of July 7, the average domestic PTA spot price was 5140 yuan/ton, down 4.25% from the previous trading day and up 41.95% year-on-year.

In fact, starting from mid-to-late June, the domestic PTA price has increased significantly. As of July 6, the average domestic PTA spot market price was 5368 yuan/ton, an increase of 12.99% from June 21 and a year-on-year increase of 47.12%. PTA futures also continued to rise, with the price hitting the 5,500 yuan mark, setting a new high since October 2019. The market opened on July 6 and it rushed directly to 4%. As of the close, the main futures contract 09 was reported at 5378 yuan/ton, an increase of 2.75%. Mainly in the context of strong crude oil, in addition to cost boost, the fundamentals of PTA's recent phased de-stocking also provide good support. Yisheng Dalian plant shut down for 2 weeks, and the overall start-up load of domestic PTA plant dropped sharply to around 76%. At the same time, downstream companies have to increase spot purchases after suppliers reduce their supply of contracted goods.

Although the crude oil end has fallen, there are still many PTA equipment to be overhauled in July, and it is expected that centralized overhaul may cause temporary supply shortage. In addition, terminal orders have improved slightly, and production and sales have been satisfactory. It is expected that PTA prices will fluctuate in the short-term as a whole. It is still necessary to pay attention to crude oil and its own new production capacity.

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