Polyester Raw Material: "Xiaofeng Xiaolanghai" Is Not Worth Mentioning, The Real Crisis Lurks In The Second Half.

The second half of 2019 has already opened, and the global situation is changing rapidly. Sino US relations, progress in production reduction and geopolitical conflicts in the Middle East will have a substantial impact on the whole polyester industry.

At the same time, in the face of nearly 6 million tons of new releases, the supply and demand pattern of the PX market will be further changed, which will also lead to the qualitative transformation of the value chain transmission. However, PTA is expected to achieve industrial value upgrading under the new round of the second round of peak demand to be released. However, the progress and the de stocking of the new installations in MEG will become the focus of attention in the second half of the year. It can be said that the first half of the polyester market still belongs to Xiaofeng xiaolangyu, and the real crisis is in the second half of the year.

PX: the contradiction between supply and demand is deepening, and the pressure of storage is increasing.

In the second half of 2019, there will be 7 million 300 thousand tons of new PX capacity in Asian market, and the progress of new factories will also be concerned by people in the industry.

At present, the next set of production facilities will be Sinochem Hong run 800 thousand tons PX production line, which has been completed by the end of 2018, and is now working on production planning and downstream customer negotiation. It is expected to be released within this month. Then it will be the two phase 1 million ton / year project of Hainan refining and chemical company, which started in 2017 and implemented in September this year. It will be put into operation in the PX installations and supporting projects in September this year. The initial plan will be put into operation in September. It is possible that there will be a 4 million ton / year PX project of Zhejiang petrochemical in the year. The unit has the largest single PX production capacity in Asia, and it will operate the atmospheric and vacuum distillation unit in May 20th, and it is expected that the commissioning time will be in the four quarter.

The progress of the new production capacity is also a time node, which will inevitably lead to a significant change in the supply and demand pattern of domestic PX, which is directly reflected in the price trajectory.

In the past three months, the supply and demand of PX in China is quite similar. On the one hand, although the new project has increased the domestic effective output, the increase in the initial stage of operation is effective. It generally takes about 1 months to adjust. On the other hand, the domestic PTA device is restarted and the new demand is released. The supply and demand of PX remain relatively balanced.

But at the end of the year, the pressure of supply and demand in China's PX market will continue to ferment. Due to the continuous improvement of domestic PX self-sufficiency capability, the competition between import sources and self produced sources will also become white hot. At present, Hengli Petrochemical has been able to realize the production of raw materials. Since July, all the import contracts have been bundled up, and only scattered sporadically on the spot market. Secondly, after the 1 million 500 thousand ton project of Hengyi Petrochemical Brunei has been put into operation, all the PX produced by the company will be transported to the domestic PTA factory for production. At the end of the year, Zhejiang Petrochemical Company is also running mode of "PX-PTA- polyester" integrated enterprise, so the import dependence of PX will decrease significantly, and the pressure of domestic PX storage will increase.

PTA:9 month output will break through the new high in the year, and the maximum output will be in the second half of the year.

In the second half of this year, PTA supply increased by 5 million 900 thousand tons: new capacity of 2 million 200 thousand tons of new Feng Ming, 1 million 200 thousand tons of Sino Thai Kun Yu, and 2 million 500 thousand tons of new capacity of Hengli petrochemical company. The main increment is the 2 million 200 thousand tonnes of new Feng Ming devices to be put into operation in September, which will push PTA output to a new high in the year.

China and Thailand Kun Yu and Hengli petrochemical plant are expected to put into operation at the end of 2019, probably at the beginning of 2020.

In addition to the new capacity production expectations, the output variables depend on the maintenance expectations of the device. In the first half of the year, the total capacity of PTA, which has not yet been overhauled, totaled 23 million 550 thousand tons (4 million 350 thousand of which had been cut short in the first half of the year), which became the biggest variable in the second half of PTA.

At the same time, it is far ahead of the second half of 2018 without overhaul capacity of 14 million tons, and last year's maintenance situation, most of the capacity maintenance time in 8-9 months and December. Therefore, the increase of PTA output is due to the trend of maintenance.

Table 22019 China PTA equipment change plan in the second half of the year

From the demand side, the new production capacity of polyester will reach 3 million 940 thousand tons in the second half of the year. However, due to a sharp decline in demand for the last year, the polyester production plan is expected to be delayed, so it is estimated that the new production of polyester will not exceed 2 million tons in the second half of the year.

At present, according to the level of 90%, polyester production will exceed 4 million 300 thousand tons per month, and the consumption demand for PTA will be around 3 million 680 thousand tons.

Table 3 plan for new production capacity of polyester in the second half of the year

Ethylene glycol: the fourth quarter or face greater challenges, industry profitability is difficult to achieve

In the fourth quarter, the relationship between supply and demand of ethylene glycol will face a bigger test than the first half of the year. The main reason is that the fourth quarter is a quarter of China's newly increased production capacity. In addition, the installation of American Lotte and Malaysia big oil will normally supply at this time point. After the centralized maintenance of the first half of the year, the installation inspection and maintenance in the second half of the year will be reduced, and the operating rate will also be significantly higher than that in 4-5 months. With the increase of polyester in the traditional off-season, the supply and demand will decrease, and the contradiction between supply and demand will be more prominent than that in the first half of the first half.

With the overcapacity in 2019, the surplus state will become more obvious in the next few years. There are three ways to solve this problem. The first way is to speed up the development of the main polyester products to digest the new capacity. At present, this way is hard to achieve. The second way is to explore new downstream, such as methanol reversing the supply and demand pattern by increasing MTO demand, but at present, the new downstream is still hard to find at present.

The above two ways can not solve the contradiction between supply and demand, so we can only gradually eliminate the part of the high cost and small scale production equipment through the industry shuffle to achieve the new supply and demand balance, but through this way to capacity, the industry profitability is bound to be difficult to achieve. It must be the loss of the whole industry to achieve. However, the early operation of the ethylene glycol plant experienced significant profit in the first few years, the capital advantage is relatively obvious, and the new equipment technology is advanced and the cost is low.

Second half of the polyester raw materials market "danger", "machine" coexist

In the first half of 2019, domestic PTA increased production capacity was less, installation started slightly improved, output increased by more than 7% over the same period last year, domestic MEG production continued to grow rapidly, and imports also increased.

Demand side, in 2019 polyester enterprises started at a relatively high level, the output of various varieties continued to improve, and the overall performance of the market was flat. Due to poor performance of terminal orders, the downstream enterprises mainly focused on on-demand procurement, and the market transactions were only warming up when the enterprises were replenishment, but their duration was often shorter.

In terms of inventory, in 2019, both the warehouse receipts and social inventories of Zhengshang were higher than those of the same period in 2018, while MEG stocks continued to be high and refreshed several times.

According to the new capacity production plan, both PTA and ethylene glycol will produce large quantities of output in the second half of 2019. Downstream enterprises, whether polyester enterprises or terminal weaving industry, can not significantly improve under the pressure of domestic and international trade frictions.

In the short term, there will be a significant decline in the supply of PTA due to the overhaul of domestic PTA devices and the larger capacity of the maintenance units. However, in the medium to long term, the supply of PTA will show a relaxed state as the newly increased capacity is put in place. Ethylene glycol will be suppressed in a short period of time by continuous high inventory, and its price will not rise significantly.

To sum up, the polyester raw material market in the second half of the year can be described as "danger" and "machine" coexist. The overall demand market has added new products, but there is still some doubt about the specific effective demand. The macroeconomic environment is not optimistic. In the second half of the year, the fluctuation of polyester raw material market is more likely to slow down, and the operation needs to be cautious.