PTA Price Up Space is Limited

     Recently, the domestic futures market was generally sluggish, and PTA futures are difficult to fall, how will PTA market perform later? Influenced by the gradual recovery of the overall market, PTA futures are expected to rise further driven by capital, but the rise space will be limited.

    External Market Stabilized and Crude Oil in Interval Oscillation

    The current external market have stabilized, the economic data of the United States and Germany and other major economies is not so bad as expected, although the global economic recovery is in slowdown, but a recession again is impossible. However, the EU debt due this month is still a large amount, so it is possible that the debt crisis continues to be hyped.

    In early August, crude oil prices following the turmoil in financial market fell sharply to $80, and it is the early response to the expectations of global oil demand growth slowdown. However, so long as the global economy doesn’t drop to bottom, the global oil demand growth will remain positive. Recently, the Libyan situation stabilized, despite the decline in Brent crude oil prices, its price gap between New York crude oil is still at high levels, so the crude oil price is unlikely to come down continuously. Generally, the overall crude oil prices will remain about $80-100, which have limited impact on the PTA price trend.

    Domestic Monetary Policy Enter into the Wait Period

    In August, CPI increased 6.2% year on year, and it dropped slightly mouth to mouth; PPI rose slightly down 7.3% year on year, but it increased mouth to mouth. Inflation data is basically in line with market expectations, pork and other food prices continue to rise is still the main factor of the high inflation in the short term. Combined with recent high-level government comments, the market expectation for substantial relaxation of monetary policy is weaken.

    As the economic recovery in the USA and Europe is slowing down and PMI domestic orders index fell sharply in August, the export situation is very grim. Since June, the central bank did not raise the deposit reserve ratio and since July did not raise interest rates, under the general expectation of inflation will drop, so the domestic monetary policy will enter a wait and see period. Despite the central bank is unlikely to ease monetary policy, monetary policy enter into the wait period will still give certain support to the domestic commodity market.

    The Support is Strong but PTA Up Space is Limited

    On August 15th, Dalian municipal government announced the decision of stopping production and relocation of Dalian Fujia 700,000 tons PX project. Currently, the domestic production output of PX is about 6,000,000 tons, and it is basically same to import volume. Calculated by 90% operation rate, the output of Dalian Fujia project accounted for about 10%, so stop production of the project in Dalian will undoubtedly exacerbate the domestic PX tight supply, and support the PX price. However, as the entire Asian market PX production capacity is surplus about 2 million tons, even taking into account some of the devices operates unstably, the PX supply and demand in the Asian market is basically in balance. Fujia contract customers are mainly manufacturers of domestic PTA production large factories, next the PTA manufacturers may face a severe shortage of raw materials, it is expected that China may increase PX purchase volume in international market.

     Under the background of upstream crude oil prices and downstream polyester market remained relatively stable, the PX tight supply will strongly support PTA price. Calculated by the current PTA price, the PTA production cost is about 9,500 Yuan/Ton, and PTA spot prices is 10000-10300 Yuan/Ton according to the PTA factories profit distribution situation, so it is not difficult to understand that the recent PTA futures contracts changes around 10,000 Yuan points. However, because another 150 million tons of PTA production capacity will release in September, if there is no strong demand support from downstream, it can not be sustained just relying on the PX price, after all, after all, the current PTA manufacturers still have relatively large margin.

    As the current PTA market is still driven by the cost, PTA up space will be limited when the performance of downstream demand is normal.