According to the Commodity Market Analysis System of Shengyi Society, the domestic PTA market has shown a weak overall trend since May. As of May 17th, the average price of PTA spot market in East China was 6573 yuan/ton, a decrease of 4.29% from the beginning of the month. At the beginning of the month, supported by PX costs and favorable conditions for large-scale PTA plant maintenance, the price slightly rose to around 6700 yuan/ton. With the continuous weakness of downstream polyester and terminal textile demand, coupled with geopolitical easing leading to a decline in crude oil premiums, prices have fluctuated and fallen.
The supply side has significantly contracted, with April and June being the peak period for PTA annual maintenance, and May’s maintenance scale reaching a new high in recent years. The planned maintenance capacity is 18.1 million tons, with an additional 5 million tons of equipment undergoing unplanned maintenance, and only 1.2 million tons being restarted. As of mid May, the industry’s operating rate has fallen to around 63%, hitting a low in recent years, and the supply side has significantly tightened. At the same time, processing fees continue to be repaired, factory losses have narrowed, and there is a strong willingness to passively reduce production and undergo maintenance, providing fundamental support for prices.
However, the high volatility of crude oil and PX on the cost side provides limited support. Crude oil prices have fluctuated and adjusted. As of May 14th, the settlement price of the June WTI crude oil futures contract in the United States was $101.17 per barrel, and the settlement price of the July Brent crude oil futures contract was $105.72 per barrel. The simultaneous maintenance and tight supply of PX in Asia have a solid cost base, but the downward transmission of power is insufficient, which can only limit the downward space of PTA and make it difficult to promote a significant increase.
The demand side continues to be weak, with downstream polyester industry operating at only 81%, a significant year-on-year decline. Insufficient orders for terminal weaving and high inventory of finished products have led polyester enterprises to proactively reduce their burden, resulting in weak demand procurement. Although autumn and winter orders and export orders gradually started in late May, it is difficult to significantly improve in the short term.
In the short term, the dividends of PTA plant maintenance will continue to be released, and inventory will be realized, with supply contraction supporting prices; But the off-season demand is difficult to quickly recover, which will drag down prices. Furthermore, from the perspective of the Business Society spot trading channel, the 10 day moving average has crossed the 20 day moving average, and the Business Society moving average continues to expand negatively. The further divergence of the 10 day and 20 day moving averages indicates that the PTA market has entered a downward trend.
In addition, considering the five levels, the current price position is at a one-year high and a 90 day mid to high range, and we need to be alert to the risk of short-term correction.
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