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[PTA: There is no end to the continuous decline, really bottomless?]
Release date:[2020/11/10] Read a total of[125]time

Recently, PTA has become a star variety, mainly because of the huge decline and the huge gains of the short side!


In the past three days, PTA January contract Masukura has nearly 300,000 lots. The current position has reached a record high, and the price has dropped by nearly 200 points.


Multiple viewpoints: The historical low is about to rebound, the industry chain cannot bear the continuous losses, and the shutdown is inevitable.


The short side's point of view: high inventory, insufficient downstream demand, and high inventory. Spot prices are far lower than futures. At present, there is still a basis of 200 points. There is still room for decline. Due to the decline in crude oil prices and the appreciation of RMB, production costs are still further reduce.


Each has its own reason and does not give way to each other. The current long-term view of the bulls is long-term and has an expected nature. The short view is immediate and realistic. In the short term, the shorts are still in an advantageous position.


The PX area has also expanded greatly in China in recent years. I haven't found the gross profit of PX, and it is estimated that it will not be too good. After all, it seems to be a loss.


Judging from many reports, the current total profit on the naphtha-PX-PTA line is relatively low, and most of the profits are on the PTA.


Long reasons if the market can rise:


1. The total profit loss of the naphtha-PX-PTA industrial chain cannot be sustained for a long time. High-cost marginal devices are all about stopping expectations.


2. The decline in crude oil prices cannot be sustained for a long time. The probability of economic recovery next year is extremely high. This year's crude oil prices have eliminated a lot of production capacity and reduced investment in the crude oil industry. There is a phased increase in crude oil prices next year.


3. It is unlikely that the RMB will continue to appreciate unilaterally. Once the situation in the United States becomes clear, the exchange rate of RMB against the US dollar may be relatively stable.


PTA gains are limited, reasons for short rallies:


1. Inventory volume, even if a small part of the devices shut down in a short period of time, the issue of volume inventory cannot be solved.


2. New PTA devices are still coming, and the pressure will continue to increase.


There are several inertial thinking we need to rethink.


1. Is there overcapacity and prices must not rise?


It's not. Overcapacity can only be a profit problem that determines the link. At present, it should be due to the excessive overcapacity in the PX production link, so PX cannot rise up and suffer a large loss, which has driven the decline of PTA production costs. So PTA fell. We assume that many PX devices will withdraw next year, or put into production will be greatly reduced, and the PX link will re-form a positive profit. Will the PTA production cost increase?


The iron and steel industry has overcapacity, and the inventory is not high, so prices are still rising.


2. The PTA industry is currently forming an oligopoly. After squeezing out high-cost devices, they are very likely to form some form of price alliance, just like the current glass industry. They definitely have the motivation to increase industry profits.


3. At present, most of the firm offers on the disk are hedging by the seller, because the disk price is higher than the spot price. But once the disk price continues to fall sharply and falls below the far lower market expected price, will there be more parties entering the market to make inventory? If the price really falls to the expected position of many parties, they should have the motivation to build inventory on the disk. If they buy from the spot market, the capital and warehouse costs required are also very large. Let us boldly estimate that if the disk price continues to fall sharply to 2800 points, the hedging power of the long and short sides will not change. Can we understand that the current price has not rebounded sharply because the price has not fallen low enough, and the current price has not fully reflected the market's pessimistic expectations?


The problem we face at present is that we cannot predict the future!


We cannot predict the changes in crude oil prices and RMB exchange rates, nor can we accurately measure the cost of PTA production, and there is no way to control the decisions of PTA and PX production enterprise managers. We are facing a black box.


In this case, we need to find probabilistic tools—time windows, trends—fund change directions and options—risk control tools to help!


We still believe that late November to early December is the time window during which PTA prices may rebound to a certain extent. The greater the current price decline, the greater the response to negative factors, the greater the future rebound may be.


The price of PTA may not have reached the end, but the long-sellers surpassed the shorts, and a staged bottom will gradually be formed. We should wait and see the result of the long-short game.


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