The United States ＂snapped up＂ raw materials to detonate PTA market？
Source: media scrolling
China Times reporter Julia reports from Beijing.
Affected by factors such as the rise in international oil prices, the varieties of the energy sector have recently shown different degrees of follow-up. Among them, on June 7, PTA once had a daily limit, and low-sulfur fuel oil and short fiber rose by more than 5%.
On June 8, PTA futures prices remained strong. As of the close of the day, the main contract of PTA futures rose by 3.71% to close at 7540 yuan/ton, and PTA futures prices hit a new high in three years.
The recent increase in PTA prices is more favorable for related refining and chemical enterprises. As of the close of June 8, the leading stocks in the industry rose sharply, and the share price of Rong Sheng Petrochemical (002493.SZ) rose by 3.52%, hitting an intraday high of 16.35 yuan/share. Hengli Petrochemical (600346.SH) rose by 3.05%, and the share price of Hengyi Petrochemical (000703.SZ) rose by 10.61% from May 19th to June 8th.
What factors have led to the strength of PTA price? What is the impact of PTA price increase on the production of related sectors?
The United States "snapped up" PTA raw materials?
Pang Chunyan, a senior analyst of SDIC Anxin Futures, told the reporter of China Times: "Recently, the price of PX has risen sharply, which has led to an increase in the cost center of PTA and a passive price increase. Last Thursday, the price of CFR China PX was US$ 1,266/ton, which has risen to more than US$ 1,488/ton on Tuesday, and rose by US$ 222/ton in three trading days, an increase of 17.5%, which led to the PTA cost rising from around 6,400 yuan/ton to nearly 7,500 yuan/ton. "
PTA is the English abbreviation of purified terephthalic acid, which is an important bulk textile raw material, and it can be widely used in chemical fiber, light industry, electronics, construction and other fields. It should be said that it is closely related to people’s daily life. This time, the continuous strength of the upstream PX quotation is the direct reason for the soaring PTA.
PX, also known as p-xylene, is the core raw material for PTA production. Usually, 0.655 tons of PX can produce 1 ton of PTA. PTA cost per ton =0.655*PX price+processing fee (about 1000-1200 yuan). For a long time, PX was originally a very unpopular market. According to past experience, 90% of PX will be used for PTA production, and the remaining 10% will be used for oil blending.
Because of the clear function, the price of this variety was difficult to get out of the independent market in the past. However, this time the problem lies in this oil adjustment function, which originally accounted for only 10%. With the gradual fermentation of Russian energy ban in the west and the strengthening of crude oil, the shortage of overseas refined oil products is obviously higher than that in China.
Last month, South Korea bought 50,000 tons of PX from China and exported it to the United States to adjust the oil. The market suddenly realized the true meaning of "mixing aromatics can adjust the oil" and even had the saying that the United States "snapped up" PTA raw materials.
At first, most people in the industry thought that this was just a gimmick of market speculation, but with the growing demand for PX, people had to pay attention to the view that "the proportion of oil blending increased". Pang Chunyan told reporters that the sharp increase in PX price is mainly due to the peak season of travel in the northern hemisphere in summer, which brings about an increase in the demand for gasoline, so the aromatics needed for gasoline blending in summer are stronger.
The sanctions imposed by Europe and the United States on Russia have changed the global trade flow of oil products, and the export of gasoline in the United States has increased, so the demand for oil blending has also increased substantially. The prices of local aromatic hydrocarbons such as toluene and xylene are much higher than those in Asia, which has led to the flow of Asian goods to the American market. The pattern of supply and demand in the Asian market has been broken, and the prices of aromatic hydrocarbons have increased significantly, but olefins have continued to slump.
Since the end of May, the price of MX (mixed xylene) in South Korea has been higher than that of PX, just like the price of flour is higher than that of bread. Since June, the price of PX has continued to rise sharply, mainly because the average spot price determined by the daily transaction price of the trade window has risen sharply. However, the actual daily transaction volume of the window is relatively low, and the buyers are often Korean companies, so there will be a saying that "Korean refining and chemical enterprises take away pricing power".
The contract goods of Asian PX factory to PTA factory are settled by combining PX’s monthly ACP price and spot average price. If ACP cannot be reached, the contract goods price is the monthly average price.
Jiang Caichao, a researcher at a current trading company in Shanghai, told the reporter of China Times that the price of PTA rose sharply this time, and PX was a fuse. On June 3, South Korea’s GS (Caltex) topped the price in the PX window, and the price of PX rose sharply. In recent days, South Korea’s GS was still active, which greatly pushed up the cost of PTA and drove the price of PTA to rise sharply.
At present, from the perspective of pricing power, it is true that China is still at a disadvantage in the pricing power of PX. At present, China imports 800,000-1.1 million tons of PX from South Korea in a month, and there is still a gap on the whole, but imports only account for about 30%-40% of the whole. China enterprises need to reflect on the pricing power. As long as there is an import gap in PX, China will still lose money on the whole.
Industry leading stocks are expected to break out.
With the rise of PTA futures, the spot price of PTA in the East China market continued to rise sharply in the morning of June 8, and the negotiation reference was around 7750 yuan/ton. Now, as the price continues to rise, traders and polyester factories are mostly on the sidelines.
Jiang Caichao told reporters that the current PTA surge is unfavorable for polyester, which has compressed the cash flow of polyester products.
He said, whether it’s filaments, staple fibers or bottles that are still profitable at present, it takes time for the upstream surge to be transmitted to the terminal, while the downstream weaving of polyester can only be produced at a low price at a high price, which is still unfavorable to the whole industry. After all, PTA is an important raw material, and the rapid rise of raw materials will still have a certain impact on the recovery of downstream industries.
However, the reporter found that in the context of high cost, China’s petroleum refining and chemical enterprises can still maintain good profitability, especially in some upstream and downstream integrated industrial chain layout and scale advantages. According to the straight flush, eight stocks in the PTA plate, including Tongkun, Dongfang Shenghong, Xinfengming, Rong Sheng Petrochemical, Hengli Petrochemical, Hualian Holdings, Zhuhai Port and Hengyi Petrochemical, have been given favorable ratings such as "buy" or "overweight" by institutions, accounting for 80% of all 10 stocks in the PTA plate.
It is understood that Hengyi Petrochemical has a crude oil processing capacity of 8 million tons/year; Participating in PTA production capacity of 19 million tons/year; PIA production capacity is 300,000 tons/year; Caprolactam (CPL) production capacity is 400,000 tons/year; The polymerization capacity of the company is 10.465 million tons/year, including 7.765 million tons of polyester fiber and 2.7 million tons of bottles (including RPET).
Hengyi Petrochemical Co., Ltd. is a leading enterprise in the petrochemical industry specializing in the production and sales of PTA, polyester fiber and chemical fiber elastic yarn related products, forming an industrial pattern of upstream and downstream integration and scale of PTA, polyester fiber and chemical fiber elastic yarn.
In addition, it is noteworthy that, according to the announcement of Dongfang Shenghong recently, the first batch of core main units of Shenghong Refining and Chemical Integration Project, a key promotion project of the national petrochemical industry planning and layout, was successfully started, which also marked that the largest refining and chemical integration project in China was officially put into production. The company’s EVA annual production capacity is 300,000 tons, accounting for about 20% of the total domestic production capacity.
Rong Sheng Petrochemical said in the introduction materials that the company is a leading enterprise in PTA industry, and its participating PTA production capacity is about 19 million tons/year, and its equity production capacity is about 9.05 million tons/year. With the first phase of 40 million tons/year refining and chemical integration project of Zhejiang Petrochemical Company put into full operation at the end of 2019, the company opened up the whole industrial chain of crude oil-fuel oil/naphtha -PX-PTA- polyester polyester.
Zheng Youfei, a futures analyst at Yide, told the reporter of China Times that in the rise of the overall price center of the polyester industry chain, the profit is basically concentrated in the PX link, and the PTA link is affected by high cost and low demand. In fact, the poor processing is constantly squeezing, which is unfavorable to the profit of PTA from this perspective. However, the rise of the overall price center of gravity is good for the inventory of PTA plant. At the same time, for enterprises with large refining facilities, it can also realize the profit of PX, which is a big plus for them.
Regarding whether PTA will continue to rise, Jiang Caichao told reporters that in the short term, due to the peak season of refined oil consumption in the United States, the price of aromatic hydrocarbons in Asia has been driven. In the short term, it is predicted that in the case of high gasoline cracking profits in the United States, aromatic hydrocarbons are still tight and PX end is still strong. Therefore, in the short term, PTA still has strong support, but with the skyrocketing raw material prices, it will have a greater negative impact on downstream polyester. If it leads to an increase in polyester production, the market will be short-term game.
However, in this regard, Pang Chunyan said that the profit of the PX link is already very rich, and there is not much room for continuing to go up independently. Even if it continues to interpret extreme trends in the short term, it is a relatively short-term performance in time. The operating rate of domestic PX has rebounded sharply, and the supply is abundant. The reduction of imports will suppress the PX market. After the logic of aromatics oil adjustment is fully traded, the price of aromatics will return with the decline of oil adjustment demand. Therefore, under the premise of stable oil price, the driving force of PX to promote PTA to continue to rise sharply will gradually weaken, and the profit of PX link may be transferred to upstream and downstream in the market outlook.
Editor in charge: Ma Xiaochao Editor in Chief: Xia Shencha