PTA inventory to pile up before end of the year

PTA margin fell from high after several PTA units have restarted since mid-October. However, acetic acid and thermal coal prices also dropped obviously recently, so 600yuan/mt is still a tolerable margin for PTA producers.

Therefore, not many PTA producers have turnaround plans in Nov and Dec. Except for 8.315 million tons PTA unit idled for long term, only Honggang and Energy Investment shut the units now and the PTA plant operating rate keeps at around 80%. Based on the maintenance plans, PTA plant operating rate in November and December is expected to float at 78~85%.

From the perspective of demand, the enthusiasm for feedstock preparation faded as PTA prices fell constantly and sales of polyester products went dull. Meanwhile, although the power rationing eased recently, the polyester polymerization rate increase slowly and keeps at 84% now.

PTA inventory is expected to increase largely by 300,000 tons in November

Under the expectation of inventory accumulation, PTA margin may probably be squeezed again later. Some PTA producers may shut the unit to adjust the market supply. Besides, some PTA goods are transferred to the futures delivery warehouses due to weak futures basis (spot/TA2201 spread), which will restrain the compression of PTA margin.

From the perspective of raw materials, although PX-naphtha spread has fallen to a low level and may not recover largely as PX supply may expand later after ZPC lift the operating rate. The demand for naphtha has been good recently, and the cracking spread has remained at a relatively high level. However, the declining LPG prices also suppressed the further strengthening of the naphtha cracking spread to a certain extent. Therefore, the fluctuation of PTA and upstream products will not be large and the PTA price will mainly follow the crude oil market trend.