Since the recent stage, the low demand of the downstream polyester and terminal loom industries due to the Spring Festival has led to a considerable blow to the PTA market after the festival. As of February 21, the average processing fee of PTA remained at 261 yuan / ton, which was more than half of the 580 yuan / ton at the end of January. It has now been adjusted to below the lower edge of the processing fee safety boundary, and most companies are in a state of loss.

However, with the arrival of the end of February, under the influence of geopolitical frictions and the negotiations between the United States and Iran, crude oil rebounded sharply, driving the focus of PTA costs to rise. In the short term, under the background that the downstream and terminal markets have not yet fully recovered, the transaction logic of the market is still on the cost side.

The situation in Russia and Ukraine continues to heat up, and oil price risk volatility intensifies

Affected by recent geopolitics, the volatility of crude oil continued to increase at the end of February, mainly due to concerns about the deterioration of the situation or the risk of energy supply. Because Europe relies on Russia for 30% of its crude oil and 40% of its natural gas imports, if there is a problem with energy supply, other countries cannot effectively make up for it in the short term.

The current Iraqi energy minister said that the current crude oil market is in balance with supply and demand, and there is no need for OPEC+ to increase oil production faster; the research report will be received on March 7, and then the next move in OPEC+ can be decided. Therefore, in the context of the current high oil prices, the current market focus is still on the impact of the situation in Russia and Ukraine on the crude oil supply side, and whether the later EU sanctions will affect Russia's crude oil exports.

On the whole, there are many external uncertainties in the near future, and the risk of fluctuations in the crude oil market has intensified, which has a greater impact on the cost of PTA.

Most companies have lost money, and the probability of joint production restrictions in the later stage is too high

With the cliff-like decline of PTA processing fees, the probability of joint production restrictions in the later stage is relatively high.

From the perspective of device load, since 2022, the 2# 3.6 million-ton device of Yisheng New Materials was put into operation on January 28, and the device load in early February was close to 50%. Considering that Yisheng Ningbo's 2 million ton unit and Yisheng New Materials' 1# 3.6 million ton unit were respectively overhauled and operated with load reduction, the pressure on the increase in production capacity on the supply side was offset in stages. However, in February, the downstream polyester market was basically on the Lantern Festival. Only then did it really return to the market, and there was a certain lag in the actual procurement of demand. The superposition of the Jiangsu epidemic affected the progress of local downstream enterprises' resumption of work, resulting in the market accumulation pattern still continuing, but the range was slightly narrowed.

If the PTA processing fee will remain at a low level after March, the probability of reducing the burden of domestic large factories is high. It is reported that in March, the 2.25 million-ton plant of Yisheng will be overhauled. supply-side impact.

After the holiday, the market demand has not been fully opened, and the market is waiting for further verification

After the Spring Festival, polyester and the terminal market have not yet fully recovered, resulting in insufficient power on the demand side and a drag on PTA. In the first week after the Spring Festival, although some downstream polyester enterprises and terminal enterprises gradually resumed work, as of February 10, the operating rate of the terminal loom industry after the Spring Festival remained at 21.75%, down 20.27 percentage points from before the Spring Festival. After the Lantern Festival, the operating rate of the terminal loom industry continued to rise, and as of February 17, it had risen to about 50%.

The comprehensive operating rate of polyester has recovered to more than 90%, at a new high since May 2021. As of the 18th, the inventory of polyester downstream varieties continued to rise month-on-month, the terminal order was not obvious, the purchasing enthusiasm was weak, and the polyester inventory rose. With the recovery of polyester production enterprises, some enterprises will usher in a stocking cycle, but whether they can boost the raw material market remains to be verified.

At present, the main logic of PTA market transactions is still the cost side; in the medium and long term, if it has been in the context of low processing fees, the probability of large factories jointly reducing negative pressure and pressure is high. With the downstream polyester market and the terminal loom industry It will gradually recover, and changes in market supply fundamentals will also become the focus of later transactions, but we must also pay attention to the impact of external uncertainties.

Hai'an County Qinfeng Chemical Fiber Co., Ltd. specializes in production and sales:polypropylene staple fiber, Polyester Staple Fiber, functional polypropylene short fiber, functional polyester staple fiber, hydrophilic polyester staple fiber,  polypropylene, PP staple fiber, polyester staple fiber.