SunSirs: Fundamentals Will Weaken, and PTA Prices Lack Power for Continuous Rise

https://www.chemnet.com   Jun 27,2024 SunSirs

Price trend

According to the Commodity Market Analysis System of SunSirs, the domestic PTA spot market had been fluctuating and strengthening recently. As of June 26th, the average PTA market price in East China was 6,008 RMB/ton, an increase of 1.43% compared to June 18th.

Analysis review

In terms of PTA equipment, the restart of the 1.5 million ton equipment in East China will be delayed until mid July, and the 2.5 million ton equipment in Northeast China is planned a maintenance this weekend, which resulted in changes in supply expectations and boosted the PTA market. However, the operating rate of the PTA industry was above 82%, and the trend of tight port cargo supply was gradually easing. At the same time, with the restart of PTA plants, the possibility of accumulated inventory was increasing.

The decline in US crude oil inventories, coupled with geopolitical tensions, and the fluctuation of international crude oil prices, still provided costs support for PTA. As of June 25th, the settlement price of the main contract for WTI crude oil futures in the United States was 80.83 US dollars per barrel, and the settlement price of the main contract for Brent crude oil futures was 84.22 US dollars per barrel.

The operating rate of the downstream polyester industry had slightly fallen to around 87%, and mainstream large factories were steadily implementing production reductions. For example, a mainstream large factory in Tongxiang planned to add 10% reduction in production for its polyester filament device, while another large factory in Tongxiang planned to reduce production by around 17-18%. A large factory in Xiaoshan also had maintenance plans. The key focus in the later stage is to pay attention to the actual implementation of the polyester factory's production reduction plan.

Market outlook

Analysts from SunSirs believe that the announced maintenance plan for PTA plants in July was limited, and downstream polyester had entered a low demand season. The reduction in production by polyester factories will lead to a decrease in production, and demand for PTA may decline, resulting in weak fundamentals. The high volatility of crude oil on the cost side lacked the motivation to drive up PTA costs. Overall, there is insufficient momentum for PTA prices to continue rising.

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