The Cost Transmit From Crude Oil to PTA is Not Always Effective
Author: May 17, 2011 16:42
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PTA is an important chemical products and chemical material and crude oil is the resource material of PTA. There is a strong correlation between the two. But PTA industry chain is relative long, the price transmit from crude oil had to go through naphtha and PX, two chains. So the price relation becomes complex in the specific situation. Now let’s make an analysis on New York WTI crude oil futures and PTA futures price trend from 2007 to 2011. (Unify crude oil price and PX price into RMB according to the current exchange rate.)
During this period, crude oil and PTA price relativity is only 0.515, while crude oil and most chemical product relativity is generally over 0.7. From the above, we can find that besides the cost transmission, there are also other important factors. See from crude oil and PTA price trend graph, there are three price change stages, respectively: Dec, 2006-Dec, 2007, there was a clear price departure of the two; Jan, 2008-Jul, 2010, price trend is generally the same, the cost transmit is obvious; Aug, 2010-Apr, 2011, their price trend tends to be different.
Dec, 2006-Dec, 2007, supply and demand imbalance led to crude oil and PTA futures price transmit get stuck.
See from the data, the relativity of PTA futures price and crude oil futures price is -0.49, and the price relativity with PX is 0.748, the industry mechanism is not reflected at all. China’s polyester industry expanded rapidly when PTA futures come into the market. PTA demand increase will boost Asian PX price increase. The total new domestic PTA production is 4100 thousand tons in 2006 and 2007. Such a big production increase in the two years and the annual 7000 thousand tons that imported bring about a shock to the domestic market, lead to a temporary supply and demand imbalance. PTA cost support is shocked by over supply. Domestic PTA spot goods price decrease continually. Although crude oil price increase generally, from 486CNY per barrel to 700CNY per barrel, the increase amount is 44%, PTA price fall from the peak 8800CNY/t to 7000CNY/t, drop amount reaches as big as 20%。PX, in the middle of the two, was pulled in different direction; the relativity with PTA becomes weak.
Jan, 2008-Jul, 2010: Balanced development of the industrial chain, smooth price transmission mechanism
After a big production capacity expansion in 2006 and 2007, PTA production slowed down in 2008, with the influence of economic influence. Meanwhile, the operation in both upstream and downstream chain lowered down. PTA supply and demand becomes relatively balanced. Jan, 2008- Jul, 2010, PTA industry chain is well developed, the transmit from crude oil to PTA cost is very smooth, whose relativity reaches as high as 0.79, and the relativity between PTA and PX reaches as high as 0.85. For price transmit was reflected, we can use statistical regression methods to evaluate PTA and crude oil price model: PTA=5.55Oil+c (c is a constant, crude oil price of RMB-denominated)
To calculate the price transmission cycle, we use crude oil price that was 0 day, 1 day, 2 days, 3 days, 1 week, 2 weeks, 1 month before PTA price. We found that the most influential factor is the crude oil price that day, the relativity is over 62%. And other factor relativity is below 10%, which indicated that price transmit has been no great delay in such an advanced network era.
Aug, 2010-Apr, 2011：Cotton price increase greatly, PTA price change
During this period, PTA and crude oil price connection is weakened and the relativity is 0.73, and the connection with PX and cotton price increased greatly, respectively at 0.96 and 0.92. As the textile material, 75% of PTA sales volume is used for polyester fiber manufacturing, including poly filament, and staple fiber, thus its price is usually influenced by relative textile materials like cotton price.
The price relationship between PTA and cotton is mainly realized by the replacement of poly staple fiber and cotton. Generally speaking, cotton and poly staple fiber replacement function is not strong for the distinctive function between poly garment and cotton garment. Besides, customers have the demand for mixed fabric, so the yarn spinning plants can not change its proportion at random.
Therefore, usually, PTA and cotton futures relativity is not that high. However, with the cotton price mount high since 2010, the price difference between cotton and staple fiber increased from 5000CNY/t in 2009 to 15000CNY/t. Then some specific poly staple fiber that is able to replace cotton yarn enjoy a good sale on the market, so that PTA textile characteristic is once more focused.
In this period, cotton price trend dominated PTA price. After analysis, we found that since the second half of 2010, the relativity data between PTA and cotton hit a new peak of 0.94. The relativity strengthened, thus the relativity from crude oil weakened. In addition, PX also boost PTA price obviously. With the influence of machinery checking and repairing and demand increasing, PX price mount up gradually, PTA cost increased, thus further boosted PTA price up.
For PX and cotton price played a more important role in PTA price trend, we use these two factors as the leading factors in PTA price change, from which we can get the price model: PTA=0.589PX+0.093cotton+c(c is a constant)
From the above analysis, we can find that the cost transmit from crude oil to PTA is not always effective. Rather PTA supply and demand situation is the main factor of its price. Under the circumstance of supply and demand imbalance, the relativity between PTA and crude oil is weakened or even on the contrary, while under the circumstance of supply and demand balance, the relativity increased. Moreover, cost factor is only one of the factors that determines price. With the coming of high cotton price, another variable force is added to PTA price factors, and the relation between PTA and crude oil price become even complex. Therefore, while analyzing on PTA price trend, requires a combination of the specific market circumstance, especially needs the supply and demand condition of the upstream and downstream market to make reasonable judgment.
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Editor: Candy From: 168Tex.com
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