Views:1 Author:Site Editor Publish Time: 2019-05-27 Origin:Site
Polyester market has stepped into downturn since mid-Apr, and this round of reduction was mainly caused by demand not because of cost side. Fabric manufacturing plants witnessed scarce orders and high inventory burden, weighing on their own run rate and the O/R of twisting units and further impacting the stocks, cash flow and O/R of the polyester products. Price of spot PTA has declined by more than 500yuan/mt by last week affected by weaker demand and the bearish anticipation with intensified Sino-US trade conflict.
Will price of the whole industrial chain decline further or not is a question that upstream and downstream players much concerned.
From the perspective of cost:
In view of PX sector, the conception that new capacity is supposed to squeeze the processing gap exists since the beginning of year. The PX-naphtha spread has been narrowed to below $300/mt after two PX units in Hengli started operation, but the cost line does not have any support. Overall market may be pressed by the new capacity in the second half of 2019 despite of rebounding crude oil in recent period, and the cost of PTA is likely to collapse further. Will the losses and excess capacity cause supply shrinkage or not should be noted.
As for PTA market, PTA-PX spread remained around 1,600yuan/mt, and PTA was the most lucrative variety of the whole industrial chain. Few PTA plants plan to have turnaround from late-May (Jinshan PC’s 400KTA unit to start maintenance from May 24 to Jun 23; FCFC’s 550KTA unit intends to have turnaround for 3 weeks in Jul). Stocks of PTA have accumulated by more than 100kt in May and may increase by more than 300kt in Jun in expectation of falling polymerization rate and the startup of new unit in Shengda, which may weigh on PTA-PX spread. Polyester market may have downward potential from the angle of PTA market.
From the angle of MEG market, price is expected to decline in the first half of 2019 with slanting ample supply. The supply/demand fundamental may be hard to alter in Jun, and losses are difficult to reverse. The downward room of the polyester market provided by MEG sector may be limited.