SunSirs: The Contradiction between Supply and Demand Continued, and PTA Prices Fluctuated and Adjusted in December

Price trend

According to the Commodity Market Analysis System of SunSirs, the domestic PTA spot market showed a fluctuating adjustment in December. As of December 27th, the average price of PTA in the East China region was 4,767 RMB/ton, an increase of 0.55% from the beginning of the month.

Analysis review

From the end of November to the beginning of December, the PTA operating rate rose to over 90%, reaching the highest level since the beginning of this year. According to statistics, the cumulative production of PTA in China reached 65.06 million tons in the first 11 months, an increase of 7.9 million tons compared to the same period last year, with a year-on-year growth rate of 13.8%. Entering December, although some facilities have undergone maintenance, they have also been restarted one after another. As of December 27th, the PTA industry's operating rate was around 86%, which has increased the expectation of loose supply. Moreover, the social inventory was around 4.1 million tons, and PTA will continue to accumulate inventory.

The OPEC+ meeting held on December 5th decided to postpone the crude oil production reduction measures until the end of the first quarter of 2025. As winter approached in the northern hemisphere, driven by the rising demand for heating oil, global crude oil demand entered the peak season, and EIA commercial crude oil inventories continued to decline. According to EIA forecast data, there will be a global supply gap for crude oil before the end of the first quarter of 2025, with seasonal increases in crude oil demand and a continued decline in inventory, which will drive up oil prices. As of December 26th, the settlement price of the main contract for WTI crude oil futures in the United States was 69.62 US dollars per barrel, and the settlement price of the main contract for Brent crude oil futures was 73.26 US dollars per barrel.

Since December, the downstream polyester production rate has dropped to below 87%, mainly due to the stable production rates of bottle flakes, long fibers, and short fibers. In terms of inventory, both long and short fibers were in a destocking state, and the inventory pressure was not significant. Although the inventory of short fibers was relatively high, the sustainability of destocking was good, which maintained the essential demand for raw material procurement. The terminal weaving factory had a strong sentiment of recovering funds at the end of the year, and winter orders were coming to an end. Although some spring and summer sample orders have been issued recently, the overall order quantity was limited, and there was little positive demand expectation.

Market outlook

SunSirs’ analysts believe that PTA's newly invested facilities were gradually stabilizing, and domestic supply continued to increase. The operating rate of weaving machines continued to decline to around 65%, indicating that the operating rate of polyester still faced the risk of seasonal decline. The supply-demand contradiction will further deteriorate, and it is expected that PTA prices will be adjusted to be weaker.

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