PTA Still Strong Raw Material Market Deserves Attention

On Wednesday, supported by PTA's parking message, PTA futures picked up slightly after a slight adjustment.

The inside market heard that a new 1 million 250 thousand ton PTA new plant in Southern China stopped on Monday because of that reason. With the rise of the futures market, the PTA spot paction has moved up, and 5250-5300 yuan / ton has been delivered. A single spot 5300 yuan cash has been sent to the paction, a single ton warehouse receipt of 5300 yuan / ton has been traded, and a lower 5250 yuan / ton has been sent to the vicinity.

The external market is stable, trading is flat, and the shipment is quoted at $740-750 / ton. No higher purchase has been followed up. It is expected to decline slightly compared with yesterday.

1, upstream

offer

2, downstream

production and marketing

The production and sale of polyester and silk products in Jiangsu and Zhejiang has dropped down to an average of 7 per cent before 4 p.m., and several direct spinning factories in Jiangsu and Zhejiang are producing and selling at 125%, 30%, 10%, 100%, 75%, 200%, 30%, 45%, 80%, 80% and 80%.

3. Position analysis

On Wednesday, the market share was larger.

The increase is mainly in the form of "Yue Yue", with more than 12 thousand hands increasing. The reduction is mainly based on Huatai the Great Wall, with a reduction of more than 3 thousand hands, while the empty market is dominated by the League of nations, increasing by about 7 hands. The reduction is mainly in the galaxy, with a reduction of nearly 5 hands.

On Wednesday, a new 1 million 250 thousand ton PTA plant in Southern China stopped on Monday for a single ton of warehouse receipts of 5300 yuan / ton.

The shutdown of a newly opened PTA plant after 60% years led to a lower PTA operating rate.

In addition, the volume of futures warehouse receipts slipped on Tuesday, indicating that there were not many spot items outside the warehouse receipt, and the large single paction of warehouse receipts on Tuesday also showed that the market had strong enthusiasm for stockpiling.

The biggest risk in the market is that the price is too high, and the risk of TA falling is not yet seen on the supply side.

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According to the long-term benchmark of USDA, China's share of global cotton consumption will increase from 37% in 2012-2014 to 37% in 2009, but it is still lower than the 42% highest in the year.

According to the analysis by the US Department of agriculture, in the long run, China's cotton policy will continue to advance in the direction of marketization, balance between the interests of cotton growers and textile mills, digest the huge domestic cotton stocks, and fulfill relevant commitments to join the WTO.

The relevant economic policies in the communiqu of the three plenary session of the CPC Central Committee in November 2013 pointed out the direction for China's future cotton policy, and emphasized that marketization played a decisive role in the allocation of resources.

In January 2014, China's State Council officially announced that cotton direct subsidy should be implemented in Xinjiang, so as to achieve the separation of cotton prices from government support and return cotton prices to the market.

The Cotton Subsidy Policy in 2014 provided guidelines for China's future cotton policy. In order to reduce market distortions, the government adopted the target price, which is lower than the reserve price in 2012 and 2013, and the support outside Xinjiang is smaller.

This variable, target price based subsidy is only limited to Xinjiang. Even in the course of last year's drop in the price of reserves, there was no re opening of the lowest price.

The support policy for Xinjiang beyond 2014 is only a fixed subsidy of 2000 yuan / ton.

Another policy decision for future directionality is to set a sliding tariff rate in the new deal of 2014.

The "target tax rate" for sliding tariff quotas in 2014 is similar to the sliding tariff rate before 2011, which shows the government's support for price.

The regulation states that if the international cotton price and RMB exchange rate are unchanged from a year ago, the target tariff can become a tariff of sliding tariff import.

On the basis of value-added tax and other charges, the sliding tariff of 10% in 2014 is actually equivalent to 27% price protection for domestic cotton prices.

In the 8 years before the implementation of quasi tax, the historical average tariff rate of VAT is 25%, which shows that the two are very close.

From 2005 to 2010, the price of cotton in China was higher than the international price, which was almost the same as that of the value-added tax.

From these policy signals, the Chinese government's support for cotton prices will weaken in the short term, and in the long run, it may return to the level of the historical long-term average.

China's internal and external cotton price differences can not be completely eliminated, because price support is a long-term component of China's cotton policy, and maintaining the lowest price will also limit budgetary expenditure of the newly born cotton direct subsidy.

Therefore, the most likely situation for China's future price support is to return to the average level of 2005-2010 years. That is to say, the price of China's purchase price is higher than that of foreign farms, and the price will fall from 50% to 2011-2013 in average, and the price will be converted to lint price, which will drop from 50-60% to 25-30%.

This is consistent with the USDA's long-term benchmark forecast for 2014.