PTA Before The Festival Climbs Steadily, Can The Market After The Festival Be Ready?

In January 2019, crude oil rebounded and the demand for downstream polyester was better than expected. PTA went out of a rally.

As of February 1st, PTA was driven by raw materials, futures markets were at a high level, and spot prices were also small. However, the downstream market was affected by the Spring Festival holiday. The market performance was dull, production and marketing was weak, and prices were mainly stable. PTA prices were expected to be high and volatile in the short term. Then, will the market change after the festival has rebounded in production and marketing?

Cost side support

On the eve of the eve of the Spring Festival, the crude oil in the internal and external markets was wide concussion, and the situation in Venezuela continued unrest. The United States announced sanctions against Venezuela oil company. Venezuela is the main supplier of heavy sulfur crude oil in the United States, and this measure may lead to the rise in the price of crude oil in the US refinery.

At the Fed meeting this week, interest rates remained unchanged. The overall policy was pigeon pie. The US dollar was suppressed and the crude oil market was supported. EIA data showed that crude oil inventories increased slightly during the week, while refined oil storage decreased. On the whole, the situation in Venezuela is still deteriorating, and the possibility of further sanctions in the United States is not ruled out. The short-term oil market is still dominated by shocks.

Demand side rate of decline

PTA current social inventory is at a low level, but this pattern will be gradually broken, because polyester and weaving industry will enter the Spring Festival holiday. Polyester has started to decline to around 79%, and it is expected that the polyester start will decline to 76% near the Spring Festival. Weaving enterprises will bulk up their stores before the Spring Festival.

At present, the raw material inventory of Loom factory is over 15 days. The raw material inventory of some loom factories is near 30-45 days. This will affect the purchase after the festival. The direct effect is to increase the stock pressure of polyester, thus affecting the polyester factory's resumption.

Warmer demand after holiday

In accordance with past practice, weaving ends are concentrated in the market before and after fifteen, but there are uncertainties in the market this year. In terms of the strength of polyester plant inspection, in January, it involved more than 700 tons of repair capacity, and the maintenance time was mostly concentrated in late January.

In February, the inspection and repair capacity was over 200 tons, basically in the early February, and will be reopened at the end of February or early March. In general, the polyester plant will start to increase to a certain high level in late February, which undoubtedly increases the demand for PTA.

Generally speaking, during the Spring Festival of 2019, the size of PTA warehouse was less than that of previous years. Polyester production profits were better, and polyester stocks fell to low levels. It is expected that after the festival, the enthusiasm of polyester recycling is higher. Under the support of demand, PTA will continue to rise in the future.

Pay attention to the change of crude oil price and demand end after Spring Festival.