SunSirs: Weak Fundamentals Will Suppress the Upward Trend of PTA Prices

Price trend

Recently, the domestic PTA spot market has maintained an upward trend, but the increase has narrowed compared to the previous period. According to the Commodity Market Analysis System of SunSirs, as of December 24th, the average price of PTA market in East China was 4,833 RMB/ton, an increase of 0.37% compared to December 18th.

Analysis review

In terms of supply, Yisheng Ningbo's 2.2 million ton PTA plant was shut down on December 9th, and Jiaxing Petrochemical's 1.5 million ton PTA plant underwent maintenance on December 12th, with an unspecified restart date. Dushan Energy's 2.7 million ton (designed capacity, actual capacity of 3 million tons) PTA plant started production on December 20th, and please pay attention to the subsequent load increase situation. From the perspective of the fourth quarter, there were not many overall maintenance of PTA plants, and the industry's operating rate was stable at around 86%, with an expected accumulation of inventory.

Geopolitical concerns, despite the unstable demand outlook, have limited the upward potential due to expectations of an excess of crude oil. As of December 24th, the settlement price of the main contract for WTI crude oil futures in the United States was 70.10 US dollars per barrel, and the settlement price of the main contract for Brent crude oil futures was 73.58 US dollars per barrel. PX factories mainly focused on maintaining normal production, with sufficient domestic PX spot supply and high inventory background unchanged. In addition, with the approaching Christmas holiday, participants' cautious trading mentality had increased.

Downstream polyester inventory pressure was not high, and a polymerization unit with an annual output of 125,000 tons in Haining had been heated up and restarted, resulting in a slight increase in polyester production to 86%. Rigid demand remained stable under high loads, but lacked substantial driving force. From the perspective of terminal weaving, some spring orders had been placed, but the performance of new orders continued to be insufficient. Recently, new inquiries and orders have continued to narrow.

Market outlook

SunSirs’ analysts believe that the continued volatility in the crude oil market provided sufficient support for PTA costs. However, with the production of qualified products from new PTA capacity and sufficient supply in the subsequent PTA market, the weak fundamentals may suppress price increases while maintaining rigid demand on the demand side.

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