PTA Prospects will be not Optimistic before the Spring Festival
Author: Dec 30, 2011 16:22
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Since the last mouth, PTA market trend is fluctuating, and the mismatching of macro aspect and industry chain made PTA futures price fluctuated around 8,200 Yuan/Ton. With the drop of deposit reserve rate in China in the first half of December, a purchase tide emerged, and the polyester production and sales rate kept about 300% in the following week, then the stock dropped dramatically and the price tended to be steady. However, the strong downstream situation did not bring PTA strong market, and the turmoil of external market and the low expectation of terminal exports limited PTA price growth. Looking ahead, PTA market trend is still hard to show, and weakly oscillation will be the main tone in the next month.
The future market of crude oil will be still strong. From the point of middle and long term, the future demand of crude oil was unlikely worse than in 2011.The economic resurgence of USA which is the biggest crude oil consumption country was smooth and much favorable news made oil demand keep steady. The growth of industry production and large automobile retention also make crude oil demand keep growing steadily in China. Though the Europe debit crisis was serious in 2011, the demand in Europe only dropped slightly. In addition, geopolitics was the key factor for supporting crude oil price. The expectation of increasing demand and geopolitics will support oil price, and the price of crude oil will fluctuate around 100 USD, which brought the petrochemical products good atmosphere for steady price.
The strong crude oil market situation led to the rise of petrochemical products which dropped sharply in early days. Naphtha dropped to $853/Ton CFR Japan in mid-November, and now increased to $910/Ton; PX price in the same period fell to $1,360/Tonne FOB Korea, and now increased over $1,450/Ton. We believe that the PX drop space will be limited, and mainly increase while in oscillation. Due to the good crude oil market situation and the growth rate of PX production capacity which lower than PTA, the PX price once again became the wind vane of PTA price.
In fact, according to the seasonal pattern in previous years, now is the time for bull market in midstream and downstream. In early December, the large purchase volume of terminal looms made the pressure of the polyester plant on the stock be eased, and the price tended to increase steadily. Polyester margins began to increase, and the scheduled maintenance or finished maintenance factories continued to operate, the polyester operating rate went back to 87%, which is an annual high point. Once the terminal loom operating rate dropped from 72% to 52% in mid-November, though it rebounded recently, but the absolute value of 63% was still the annual low point. From the perspective of industry chain, the vulnerable PTA market was not only because a substantial expansion of its production capacity. In 2011, PTA production capacity increased 4.85 million tons, and the growth of production capacity in Asia will be more than the ten million tons in 2012, and the weak PTA market mainly because the low demand of textiles and apparels exports. From this point of view, PTA and cotton faced the same situation. Observing the textile and garment exports situation so far in 2010, the export growth rate dropped dramatically in recent three months, particularly the garment industry. The main reasons of sharp drop of textiles and apparels exports are the replacement of Southeast Asian low-cost labor to the textile industry in China and downturn of external economy. In summary, strong crude oil and PX market situation will support the PTA price, and the low stock of polyester factories and tolerable profits made PTA rebound possibility exist. However, the looms operating rates around the Spring Festival will drop sharply, and the low terminal exports and overcapacity in industry will make PTA prospects for development not be optimistic. |
Editor: leila From: 168Tex.com
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