Views:2 Author:Site Editor Publish Time: 2019-04-02 Origin:Site
The profit of the polyester industrial chain was reallocated recently. The profit of PX, MEG, DTY and grey fabric market in expectation of weak fundamental is transferred to the PTA and polyester sectors in anticipation of strong fundamental.
On the afternoon of March 24, the refining and chemical integration project of Hengli Group Co.,Ltd. has gone through the whole production process. The first 2,250KTA PX line achieved on-specification production, with current run rate at 50-60%, which is supposed to ramp up run rate in later period. The second 2,250KTA PX line is expected to start operation in Apr-May. The successful startup of PX in Hengli was around one quarter ahead of schedule, breaking the optimistic anticipation toward supply/demand pattern in the Q2. Price of PX has started falling since early-Mar, and the PX-Naphtha spread was apparently squeezed. The profit of PX was shifted to PTA and polyester products. With increasing production of PX in Hengli, domestic PX supply is expected to rise greatly and the PX-Naphtha spread may be narrowed further.
Supply and demand on PTA market is better than anticipated on the contrary. Hanbang’s 1,100KTA PTA unit shut down temporarily. Yisheng Dahua’s 3,750KTA plant would have round turnaround for a week amid catalyst issue. BP Zhuhai’s 1,250KTA PTA unit was scheduled to have turnaround for 25 days from end-Mar. Hengli Dalian’s 2,200KTA PTA plant planned to have turnaround for 15 days from Mar 28. Jiaxing Petrochemial’s 2,200KTA PTA plant is expected to start maintenance around Apr. Fuhua’s 4,500KTA unit is scheduled to have turnaround for half a month in May. FCFC and Jinshan also intended to shut down for turnaround. Meanwhile, the profit of polyester products was sound recently, and inventory was within normal level. Polymerization rate has rose to 92-93%. Based on such tendency, the PTA inventory is anticipated to decline by more than 150kt respectively in Apr-May. In expectation of better supply/demand on PTA market, PTA processing fee has been enlarged to 1,000yuan/mt. In later period, price and profit of PX is likely to both reduce, and price of PTA may decline, while PTA profit is supposed to maintain. With high processing gap of PTA, the actual turnaround of PTA units still needs further observation.
Profit of polyester products increased, but the increment was divided, and the growth for POY was the most apparent. POY plants turned to see more than 600yuan/mt of profit instead of suffering losses. The destock on polyester market was fast this year (around one week ahead compared with 2018), which was mainly attributed to the following reasons: 1. The demand was pulled forward. Downstream plants witnessed many orders before the Spring Festival holiday, so stocks of grey fabric declined rapidly, but the feedstock was not locked in. Therefore, once feedstock price climbed up, downstream buyers restocked ahead of schedule to lock in profit. 2. Downstream twisting units and fabric mills substantially expanded capacity in 2017-2018, directly leading to growing rigid demand for PFY, but most new polyester units are expected to start operation in the second half of 2019, so sales of PFY are of high possibility to increase cooperated by some bullish news. 3. After the cut of VAT from Apr 1 confirmed, downstream plants chose to restock in advance in Mar to gain tax gap.
Profit of downstream twisting units and fabric mills has apparently reduced compared with the same period of last year, and most sparse twisting plants and conventional fabric manufacturing units are under deficit based on spot feedstock. Downstream plants have to use feedstock prepared before to produce the current orders in order to be profitable. Current situation on downstream market is mainly because the demand growth is worse than past years when downstream capacity was greatly expanded, so the supply/demand contradiction is prominent. Currently, stocks of grey fabric are mounting, and profit is meager. The social stocks of PFY (including the finished goods inventory in PFY plants and the feedstock inventory of end-users) remain high. If feedstock price moves down, downstream plants are likely to cut run rate and lower stocks, which may result into dwindling rigid and speculative demand for PFY. The stocks are likely to be gradually transferred to polyester products side, and the profit of polyester sector may be squeezed thereafter.