SunSirs: Weak Supply and Demand, the PTA Market Was Downward Under Pressure in July

Price trend

According to the SunSirs’ Commodity Market Analysis System, the domestic PTA spot market exhibited a V-shaped trend in July. As of July 30, the average PTA price in East China was 4,889 RMB/ton, down 3.79% from the beginning of the month. Crude oil volatility limited cost support in the first half of the month. Anticipated capacity expansion in the PTA industry, coupled with anticipated polyester production cuts, led to a weak supply and demand situation for PTA. However, with improving macroeconomic sentiment and firm commodity prices, the PTA market rebounded.

Analysis review

On the supply side, there were no official announcements of new PTA plant maintenance plans in July, indicating ample supply in the industry. New plant commissioning was also underway, negatively impacting PTA prices. As of July 30, PTA utilization remained around 80%, and with low processing fees, an increase in PTA plant maintenance is expected in August..

Due to the combined influence of bullish and bearish factors, the traditional peak season for fuel consumption in the United States continued, and supply-side risks had not been eliminated. International oil prices will remain volatile in the short term. As of July 29, the September contract for WTI crude oil futures in the United States settled at $69.21 per barrel, and the September contract for Brent crude oil futures settled at $72.51 per barrel.

The downstream polyester industry entered its traditional off-season, with insufficient orders weakening the industry's bargaining power. Profits gradually shifted upstream, losses began to widen, and purchasing enthusiasm was dampened, with purchases remaining based on just-in-time needs. The rebound in macroeconomic sentiment at the end of the month stimulated buying sentiment, leading to a slight increase in demand.

Market outlook

SunSirs’ analysts believe that the low-end inventory replenishment had alleviated the inventory pressure of polyester factories. They expect PTA supply and demand to improve in August, but the subsequent supply and demand outlook remains weak, with limited upward momentum. Overall, PTA prices will continue to mainly fluctuate following the cost side and market sentiment.

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