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SunSirs: Strong Supply and Weak Demand, PTA Market Will Still Be Dominated by the Downward Trend

December 09 2022 13:14:38     SunSirs (John)

Price trend

According to the monitoring of SunSirs, since December, affected by the weakening cost and weak demand, the decline of PTA price has expanded. As of December 7, the average price in the domestic East China market was 5,115 RMB/ton, down 7.88% from the beginning of the month. On November 8, the market stopped falling and rose 0.16% on a single day.

Analysis review

In terms of PTA supply, the new production capacity was put into operation later than the market expectation. At present, two sets of new units have not been put into operation substantially. However, some units were restarted, of which the 350,000 ton Yizheng chemical fiber unit was overhauled on November 4 and restarted on December 7. The 700,000t unit of Yadong Petrochemical was overhauled on November 27, and it is planned to restart on December 12. At present, the industry starts at around 66%.

The international crude oil price fell to the lowest level in the year. As of December 7, the settlement price of the main contract of the WTI crude oil futures in the United States was US 72.01 dollars/barrel, and the settlement price of the main contract of Brent crude oil futures was US 77.17 dollars/barrel. The crude oil supply is expected to recover in December, and the demand for refined oil at home and abroad is sluggish, and the focus of oil prices continues to move downward. The weakening of cost support drags PTA downward.

In terms of demand, the downstream polyester industry passively reduced its load under the pressure of high inventory and cash flow recovery. In the textile terminal market, demand remained weak in the off-season, and new orders at the terminal continued to decline. Since the beginning of November, with the terminal texturing in Jiangsu and Zhejiang and the weaving manufacturers' holidays, the comprehensive operating rate of Jiangsu and Zhejiang looms has dropped below 50%.

Market outlook

Analysts from SunSirs believe that the current energy demand outlook is still not optimistic, and the weak economy has depressed oil prices. Overlaid with the expected decline in downstream demand, the contradiction between strong supply and weak demand of PTA is prominent. Although PTA has a temporary rebound trend, it is difficult to last, and the future market will still be dominated by the downward trend.

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