Yesterday, PTA ended its sideways trading pattern and fell sharply due to the impact of the futures market. The main reason for this ice-breaking decline was the weak futures market. Even if PTA’s fundamentals showed a warming trend, it could not withstand the sharp decline caused by the black market. But overall, PTA has shown a certain resilience in futures products.
For the PTA market, which has been in a sideways stalemate for a long time, when crude oil has been rising for many days and the fundamentals of PTA supply and demand have been gradually improved, this decline has really shocked market participants. How do market participants view the subsequent trend?
A domestic trader: Although crude oil has continued to rise in the past few days, cost support cannot be used as a reason to go long in PTA, and there is an expectation of tightening macro funds, and the overall commodity futures market is weak; PTA warehouse receipts are under great pressure, and destocking is also Relatively slow; even if PTA social inventory and polyester inventory are better than in March, the intensity is still not obvious. The slow demand transmission will see whether it can be sustained. If the demand can be sustained, PTA may have a rebound.
A certain domestic PX matchmaking: There is an expectation that Indian PX will be put into production in the second quarter. If the device is put into production, it may affect the PX maintenance efforts in the second quarter. After yesterday’s decline, the current naphtha-PX price difference has been compressed to US$340/ton. Even if PTA’s domestic performance is weak, However, if the price difference is lower than US$350/ton, the PX factory will have the intention to raise the price, so there is still some support for PX.
A domestic polyester factory: The central bank stopped reverse repurchase for 13 consecutive days and continued to tighten market capital injection. In addition, the futures exchange has lowered the margin ratio in recent days. It can be seen that the overall funding and activity of the futures market are not high. On the 13th, the central bank restarted the 110 billion yuan reverse repurchase operation, and the intensity of capital investment was not high. It can be seen that the tightening expectations may gradually increase. Therefore, the market lacks good stimulus and is currently constrained by its own supply. It is estimated that it is difficult to have a big increase. We can only watch the shock conservatively. Although the downstream order situation is pretty good, downstream companies are afraid to stock up on inventory in this situation, not to mention that May will usher in the off-season of demand, and we are not optimistic about the end market.
Indeed, although PTA benefited from the impact of Hengli, Yisheng, Tongkun and other installations in April, PTA ushered in a phased inventory destocking, but it is expected that PTA will destock approximately 180,000-200,000 tons in April. For the current delivery inventory of 1.247 million tons In terms of quantity, it is still slightly insufficient. And considering that the Yisheng and Tongkun installations are about to resume, PTA’s phased destocking will gradually come to an end. If TA does not “slim down”, how can a wave of good news start a rebound?
From the perspective of polyester factories, there has been a short-term recovery in demand driven by the continuous rise in crude oil, and the inventory of finished products in polyester factories has declined. But the recovery in demand did not last. With the continuous decline of PTA in recent days, the production and sales of downstream polyester factories have once again dropped to 50-60% level, and inventories have accumulated again. However, the performance of terminal demand is acceptable, but the continued weakness of PTA makes terminal buyers adopt a wait-and-see sentiment.
To sum up, it can be seen that although the current supply and demand fundamentals of PTA are showing a warming trend, PTA is like a fat man. It is difficult to rebound quickly without further “downsizing”. Therefore, PTA must gradually accumulate favorable conditions and wait for the opportunity to rebound.
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