PX Price Downside Temporarily Affects PTA Uplink

Since the beginning of June, under the hype of insufficient supply stage, the domestic chemical products have seen a sharp rise in unilateral prices.

Among them, PTA (4736, -142.00, -2.91%) prices rose by 5.3%, the overall trend is obviously weaker than other chemicals.

Then, after the surge in June, can the PTA rally continue in July? The late PTA plant is facing overhauling, which has blocked the impact of processing fees on supply. Supply shortage has become a dominant factor affecting the market, and PTA prices are expected to continue upward.

First of all, from the perspective of cost analysis.

The price is PX Korea FOB price * US dollar to RMB exchange rate * 1.17 value-added tax * 1.02 import tariff +200 yuan / ton freight, calculate the cost of importing PX by domestic manufacturers, and then import PX

X 0.655 (PX to PTA ratio) calculates the variable cost of PTA (labor cost is regarded as a fixed cost). Finally, it calculates the PTA processing fee by making the difference between the spot price of PTA and the variable cost of PTA.

It was found that the PTA processing fee maintained at 400 yuan / ton (July 1st yuan was 383 yuan / ton), at a very low level, which means that under the premise of constant cost, PTA has little room to fall.

In addition, from the perspective of variable cost, although PTA has limited space to fall, variable PX is still the key element of variable cost, so variable costs are constantly changing.

Based on the above judgment on the future price of PX, PTA processing fee will increase.

Theoretically, PTA is hard to maintain higher processing fees in the industry with excess capacity, which determines the limited PTA uplink space.

The following is a brief analysis of the trend of PX. First, under the suppression of a strong dollar, the recent crude oil shows a downward trend of oscillation. The possibility that crude oil will oscillate in the weak range of 40 to 50 dollars / barrel will imply that the cost of PX will decrease slightly. Secondly, the difference between PX and naphtha continues to expand. With the increase of profits, the enthusiasm of enterprises will increase. Finally, although the 450 thousand ton PX installation of Liaoyang Petrochemical Company is scheduled to be servicing regularly from the beginning of July to September, the PX installations of Japan, Korea and India will be restarted, and the overall supply of PX is expected to increase.

For now, chemical fibre in East China

The company has not received notice of the temporary shutdown of the government, most of which are still in operation.

Although it is difficult for us to calculate the impact of late production restrictions on actual production, considering the high concentration of domestic chemical fiber production in eastern China, it will still have a great impact on the actual supply of PTA. Even though polyester enterprises have recently increased stocking, the problem of insufficient stage supply is still hard to avoid.

Of course, the central suspension of production involves 36% of the domestic PTA capacity, while the PX capacity is only 25%. In addition, considering that domestic PX relies heavily on imports, the impact of the closure of the G20 Summit on the supply of PX is far less than that of PTA, resulting in a significant decline in the productivity of the middle reaches. The supply of upstream raw materials is relatively adequate, resulting in the decline in PX demand, the downward price of PX and the expansion of processing fees.

Will this situation lead to a fall in the price of PTA? I think not.

Since the above logic is the premise of the expansion of processing fees, the supply of PTA will increase, resulting in the PTA price fall, but this PTA enterprise is compulsory administrative shutdown. Even if the operation situation is improved, PTA enterprises are also difficult to resume production, which interrupting the pmission of price to the supply, meaning that the impact of processing fees on the later stage supply will be very limited, and the shortage of supply stage will become the dominant factor affecting the market.