SunSirs: With Both Cost and Demand Weakening, PTA Prices Fluctuated Downward in May

Price Trends

According to the SunSirs Commodity Market Analysis System, as of the end of May, the spot price of PTA in China's East China region stood at 6,258 RMB/ton—a decline of 8.87% compared to the beginning of the month. Although increased maintenance shutdowns led to low operating rates, the resulting market support was limited. The market was dominated by the "rollercoaster" volatility of crude oil prices, while the scarcity of orders during the textile industry's off-season weighed heavily on prices.

Market Analysis

Throughout May, international crude oil prices generally trended downward. This shift was primarily driven by a rapid transition in market sentiment—moving away from the "geopolitical conflict premium" that had previously prevailed—toward expectations of diplomatic de-escalation, compounded by bearish fundamental factors. Under the combined weight of four key elements—signals regarding the resumption of U.S.-Iran talks, the partial restoration of shipping traffic through the Strait of Hormuz, the IEA's downward revision of supply and demand forecasts, and a massive surge in API crude oil inventories—the risk premium built into oil prices during the preceding period dissipated en masse, resulting in a distinct downward trend in the crude oil market. Furthermore, dampened by weak global demand and concerns that escalating geopolitical conflicts could drag down economic growth and oil consumption, the crude oil market experienced a significant decline. Reflecting this downturn in crude oil prices, domestic market prices for gasoline and diesel—particularly those from independent refineries—remained at low levels. As of May 28, the settlement price for the July contract of U.S. WTI crude oil futures stood at $88.90 per barrel, while the settlement price for the Brent crude oil futures contract was $93.71 per barrel.

On the supply side, some units at major PTA plants underwent scheduled maintenance during April and May. Specifically, Dushan Energy’s 2.5 million-ton PTA Unit #1 was shut down around May 16; Honggang Petrochemical’s 2.5 million-ton Unit #1 experienced a brief shutdown on May 23; and Hengli Huizhou’s 2.5 million-ton Unit #1 underwent a temporary, unscheduled shutdown on May 29. The current operating rate of the PTA industry stands at less than 60%.

On the demand side, polyester plant operating rates have fallen below historical levels for the same period—year-on-year—due to a sharp surge in raw material prices; as of the end of May, the polyester operating rate stood at approximately 80%. However, end-market orders remain generally weak; moreover, the substitution effect driven by high prices has become apparent, leading downstream users to prioritize the depletion of existing raw material inventories rather than actively pursuing new purchases. Consequently, the weaving industry is striving to minimize machine operating rates in an effort to curb the pace at which inventory levels are rising.

Market Outlook

Analysts at SunSirs believe that the crude oil market is currently focused on negotiations regarding geopolitical tensions in the Middle East. If the conflict in the Middle East persists over the long term, it would not only drive a sustained rise in oil prices but also exacerbate global inflationary pressures, thereby dragging down global economic growth; in the short term, crude oil prices are expected to experience significant volatility. On the demand side, current indications suggest that the recovery of supply within the polyester industry chain will still require time; furthermore, with downstream sectors currently in their traditional off-season, prices are expected to remain under pressure in the short term. Consequently, future market trends will continue to hinge on developments regarding both production costs and demand.

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