PTA plant operating rate to rise further despite of squzeezed margin

Although PTA margin has been squeezed quickly since early November, PTA plant operating rate still keeps at 78.1% and may continue to increase to over 80% later after the full restart of Honggang Petrochemical’s 1.5 million tons/year PTA unit.

After the relax of power rationing in Zhejiang, the polyester polymerization rate上has increased to 86%, but considering the higher inventory of polyester fibers, the further increase of the operating rate is expected to be limited.

In addition, PTA plants have no maintenance plans later. On the one hand, most PTA plants have finished the annual maintenance plans; on the other hand, although the processing margin is low now, most PTA companies use futures, options and other financial tools to manage risk and obtain additional profits. In addition, many PTA companies have formed industrial integration and their anti-risk capabilities have also improved. Therefore, the PTA plant operating rate will remain at a relatively high level in the short term. PTA inventory is still estimated to increase 300,000 tons in November.

After the delivery of the September futures contract, the spot goods have gradually transferred to the futures warehouses with the risk-free arbitrage opportunities emerging. The delivery warehouse has given full play to its role as a reservoir.

The number of registered warehouse receipts in the future delivery warehouse has reached 115,786 (as of November 16), which is converted into PTA inventory of 578,900 tons (including PTA plant warehouse receipts of 82,000 tons).

According to CCF PTA Inventory Report, from September to mid-November, PTA inventory increased by 320,000 tons. From the perspective of the inventory structure, some spot goods at port have also been transferred to the delivery warehouse, resulting in a contraction in the spot liquidity.

In the next period of time, PTA market will be change in a dilemma. The weak sales of polyester products will discourage the procurement for feedstock, suppressing the increase in PTA; however, the ample storage capacity of futures delivery warehouses will continue to alleviate the impact of heavy inventory on the spot market, supporting the PTA prices. Both PX-naphtha and PTA-PX margin are at a relatively low level, so PTA prices will mostly follow the crude oil fluctuations.