PTA Capacity Expansion

In November, with the end of maintenance and resumption of production of large equipment of hengli petrochemical and hanbang petrochemical, the domestic PTA supply picked up and the future price further declined.The main contract fell as low as 4,648 yuan per ton on November 12 and closed at 4,808 yuan per ton on November 25.

Downstream demand is slowing down

After the overhaul peak in October, November domestic PTA plant maintenance strength decreased significantly, in the case of not consider temporary short stop motion, only tung kun petrochemical 1.5 million tons/year, dongya petrochemical 700000 tons/year, and escape in hainan sheng 2 million tons/year plant maintenance arrangements exist, and that several sets of equipment are to finish maintenance plan in this week, including tung kun petrochemical and hainan escape device has been reset, domestic PTA plant construction will again rise to close to full capacity.As of November 25, the operating rate of domestic PTA plant is 92.08%.

Since mid-to-late October, with the winter order production of polyester enterprises basically ended, the downstream demand began to gradually transition to the low season, polyester factories started to show a slow decline, although the market production and sales occasionally recovered, but the duration is short.Up to November 25, polyester factory operating rate is 87.20%, jiangsu and zhejiang loom operating rate is 74.5%;In the week of November 21, the weekly average production and sales of polyester chips were 104%, polyester staple fiber and polyester filament were 92% and 100.8%, respectively.

Processing profit still has compression space

Since this year, the whole PTA industry chain is facing the situation of profit compression.As the direct raw material of PTA, PX is facing a large number of new production capacity to put into production this year, including hengli petrochemical 4.5 million tons/year, zhejiang petrochemical phase I and other large equipment.The rapid expansion of production capacity caused the price of PX to drop significantly, and the processing profit of PX was also significantly compressed.Although the polyester industry in the terminal textile still has some support, but the overall demand is relatively flat.In order to reduce inventory, improve sales, polyester enterprises tend to adopt preferential price sales strategy, but also is compressed, so its profits, especially after the National Day holiday, polyester profits further, each type polyester filament polyester FDY such since October will enter a state of loss, the remaining varieties also fell to year low profits.

Due to the malposition of new production capacity in the production time, PTA processing profit has been at a high level for most of this year. In early July, the processing profit once reached 2423.37 yuan/ton (excluding fixed costs, the same below), a record high. However, as the new device is coming into production at the end of the year, PTA processing profit starts to decline.At the end of October, one of the 2.2 million ton/year units of phase 1 of xinfengming (603225, shabaa) was put into production, and the expansion of PTA capacity was officially started.In addition, another line of xinfengming phase 1 is about to start trial production of 1.1million tons/year equipment, zhongtai petrochemical plant will start production of 1.2million tons/year PTA equipment, and hengli petrochemical plant of 2.5million tons/year equipment of phase 4 will start production around December 20 and the end of December respectively.As of November 25, PTA processing profit is 584.86 yuan/ton, while the fixed processing cost of the latest line 4 device of hengli petrochemical is only about 350 yuan/ton. Therefore, although the current PTA processing profit is at a low level within the year, there is still some compression space under the environment of capacity expansion.


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