I. Market Review and future prospects
This year, the price of domestic PTA futures main contract has gone out of the "m" type trend of gradual downward shift of the center of gravity. Under the support of favorable factors such as crude oil bottoming up, terminal replenishment and equipment maintenance before the Spring Festival, the first quarter price showed a fluctuating upward trend and reached a high point within the year; in April and may, under the multiple pressures of insufficient terminal orders, weak polyester demand, restart of maintenance equipment and upgrading of trade disputes, the futures price began to go out of the almost unilateral downward market; after entering June, the futures price showed an upward trend, Driven by the enhancement of downstream bottom reading willingness, tight spot circulation and relaxed relationship, PTA futures price showed a sharp rebound trend at the bottom; however, under the pressure of high PTA spot processing costs, PX and PTA end new capacity continuous release expectations, the futures price hit the second high point in early July, and then started a continuous unilateral decline trend, and reached the year's low point in mid November, and then the price opened At the beginning of the weak rebound.
As far as the main contracts of MEG futures are concerned, there is an asymmetric "W" trend of long left and short right. From the beginning of this year to July, China's MEG futures prices are basically in a downward trend of unilateral shocks. From the point of view of the cumulative decline of RMB 820 / T from the beginning of last year to the end of May of 2018, the cumulative decline of spot price of RMB 820 / T from the beginning of last year to the end of September was the main reason for the decline of spot price of RMB 820 / t from the beginning of last year to the end of September. As the 1905 contract was changed to 1909 contract, the expectation of long-term production capacity led to the continuous weakness of 1909 contract, which directly led to the futures price later than the spot price bottoming out; with the gradual decline of port inventory from the historical high, MEG supply and demand structure gradually balanced, and the forward price began to show signs of bottom rebound. The attack in Saudi Arabia in September led to the ignition of speculation atmosphere, At one time, the futures price of MEG rose sharply and approached the high point of the year. With the cooling of emergency events, MEG futures price began to fall from the high level and reached the periodic low point in early November. However, due to the delay of port cargo, pollution of some sources and the historical low of inventory, MEG futures price rebounded again in the subsequent time, and MEG spot was in the short covering zone of paper goods Under the action, it soared sharply and reached a new high in the year.
Judging from the capacity growth rate of each link in the polyester industry chain, there is no doubt that the proportion of increase in PX link this year is the largest, and that of next year is MEG. Judging from the production capacity of 4.28 million tons of MEG and 4.28 million tons of new production capacity of MEG in the next year, it is expected that the new production capacity of MEG and PTG will be 5.8 million tons and 1.78 million tons respectively. Of course, there are some differences between the plan and the actual production of the plant and the impact on the market output.
In the whole annual report, we will be divided into three parts: polyester, PTA and MEG.
First of all, from the polyester end, after the last round of industry reshuffle, the growth rate of domestic polyester production capacity bottomed out in 2016. In the following three years, domestic polyester production can continue to put into production. Moreover, no matter from the overall load of polyester or the annual average profit index of polyester products, polyester enterprises have been in an obvious business cycle in the past three years. However, the operating rate of next year is expected to decline, which is mainly affected by the drag of terminal demand. Due to the expected decline of domestic economic growth rate, the demand of textile and clothing as a mass consumption keeps consistent with the overall economic growth rate, which will lead to a downward trend of domestic terminal demand. In addition, in the case of continuous foreign trade disputes, the export volume of textile and clothing also presents an obvious downward trend, which will drag down the terminal demand of this sector. In addition, due to the gradual decline in the profits of the textile industry, the fixed asset investment in the textile industry fell again and entered negative growth after a short rise in the early stage. In the absence of terminal investment, the demand for polyester will face greater challenges next year.
Secondly, as far as upstream PX is concerned, this year is a big year for domestic PX to be put into operation. With the launch of large-scale refining and chemical integration projects such as Hengli petrochemical and Zhejiang Petrochemical, domestic PX will enter the era of domestic substitution for import. Next year, there will still be a number of new production capacity to be put into operation. At that time, the import dependence is expected to fall below 50%. Obviously, this will directly impact the existing PX exporting countries. As the single set of PX production capacity in these countries is small and the production cost is high, they can not compete with the domestic units that have just been put into operation or will be put into operation in the future. Under the condition that the price difference between PX and naphtha continues to be low, some units will inevitably withdraw from the historical stage next year. From the perspective of PTA, after de stocking in the past few years, the absolute inventory and the ratio of warehouse to consumption of PTA in China are at a low level, but they begin to rise after reaching a historical low at the end of 2018. In addition, starting from this year, domestic PTA has entered the cycle of capacity expansion again, and the annual spot processing fee of PTA has reached the highest level since the past eight years. However, under the situation that the expansion cycle has become a foregone conclusion, next year's PTA spot processing fee will be significantly lower than this year, and the processing fee range is expected to be between 400-600 yuan / ton for most of the time. If we rely on the above-mentioned production capacity in 2015-2015, we hope to maintain a new round of processing costs if we rely on the new production capacity in 2015-2015.
Finally, from the MEG side, the centralized production of coal chemical industry in the third and fourth quarters of last year led to a sharp drop in MEG prices at home and abroad, and the cash flow of various MEG manufacturing processes was significantly compressed. In addition, there will be more units planned to be put into operation at home and abroad next year. In addition to coal chemical industry, the integration of refining and chemical industry and the commissioning of ethane cracking unit will aggravate the competition pattern in the domestic MEG market, which may force the withdrawal of some early stage coal chemical plants and the postponement of the commissioning of new coal chemical plants. At the same time, the operation of some units is more unstable, and the capacity utilization rate will further decline. In addition, with the gradual increase of domestic MEG production capacity, MEG import dependence will also gradually decline. However, considering the cost advantages of some foreign ethane cracking units, the import dependence may still exceed 50%. On the one hand, the pressure of capacity increase is lingering; on the other hand, the low inventory of the port supports the price. As a liquid chemical product, the low volatility of MEG may increase next year.
On the whole, we believe that the prelude of the whole polyester industry chain integration will start next year, and the raw material price will mainly run at the bottom. However, in the case of continuous production capacity in each link, the expectation of customers in the industry chain to be bearish in the future is relatively consistent, which also leads to the inventory of each link being relatively low. If the price has dropped to the cost line of most units by then, once the new units are put into operation or the old units are shut down, and the supply and demand are improved in stages, the price may rebound violently at the bottom. Moreover, if the price correction is excessive, the pressure of long-term supply and demand will lead to price fall again. Therefore, although we think that the price will be at the bottom most of the time next year, the operation opportunity still needs to be grasped.
2、 Analysis of influencing factors
(1) the three-year business cycle of polyester industry may end
From the polyester side, after the industry reshuffle of the whole industry chain from 2012 to 2015, the growth rate of domestic polyester production capacity bottomed out in 2016. Especially around 2015, many domestic polyester enterprises went bankrupt and restructured. The industry leaders took the opportunity to integrate and eliminate backward production capacity, which led to the later industrial boom cycle. In the three years after 2016, domestic polyester production can continue to be put into production. In 2018, the production capacity increased by 14%, and this year's growth rate was 6.5%. It is estimated that the new production capacity of next year will be nearly 5 million tons, with an increase of 8.7% over this year. In this new round of capacity expansion cycle, the production intensity of polyester leading enterprises is more obvious, and the industry concentration is constantly improving. With these enterprises going up After PTA, PX and even crude oil end extension, the future competitiveness will be more prominent.
In addition, it can be seen from the annual load of domestic polyester enterprises that in the past three years was due to the relative boom of the industry, and the annual operating load was around 88%. However, according to CCF's forecast, the growth rate of domestic polyester production is expected to be around 6% next year. It is estimated that the annual operating rate of next year will drop to about 83.5%, which is also one of the signals of the industry from prosperity to decline.
Another sign of whether an industry is in a business cycle is the level of profits. Judging from the annual average profits of polyester products in the figure below, the profit levels in 2017 and 2018 are significantly higher than those in 2015 and 2016, but the average profits of this year have begun to fall significantly. Moreover, the profits of the industry will probably further decline next year, which is also a signal of the end of the boom cycle.
(2) under the downward trend of economic growth at home and abroad, terminal demand will inevitably decline
After experiencing the past high-speed growth, the domestic economy has entered the shift period, and the growth rate is steadily moving down. As a mass consumption of textile and clothing demand, it is consistent with the overall economic growth, which can be inferred that the future domestic textile and clothing demand will also be next step. The figure below shows the cumulative year-on-year trend of the domestic retail sales of clothing, shoes, hats, needles and textiles and the current price of GDP. It can be seen that the trend of the two is similar. The former is more volatile. Our preliminary judgment is that the sample of retail sales here is physical stores, excluding the third-party online sales platform. Due to the rapid increase of online shopping in recent years, some retail sales have not In the statistical range, but the trend is relatively consistent. In addition, in order to reflect the impact of prices, the current price of GDP is not adjusted for inflation. Considering the impact of the Spring Festival holiday, we also exclude the data of January and February.
In addition, in the case of continuous foreign trade disputes, the export volume of textile and clothing also presents an obvious downward trend, which will drag down the terminal demand of this sector. As can be seen from the figure below, there was an obvious rebound trend in the third and fourth quarters of 2016, but after the second quarter of last year, with the continuous escalation of trade disputes, the export volume began to decline significantly. Similarly, considering the impact of the Spring Festival holiday, we exclude the data of January and February.
In addition, due to the gradual decline in the profits of the textile industry, the fixed asset investment in the textile industry fell again and entered negative growth after a short-term rise in the early stage. This is quite rare in the history of the past decade. On the one hand, it shows the decline of the competitiveness of the domestic textile industry, on the other hand, it shows the bleak future prospects. In the absence of terminal investment, polyester demand will face greater challenges next year. The data of January and February are also excluded.
(1) domestic PX units are put into operation, and the price difference of PX does not maintain a low level
As far as upstream PX is concerned, this year is a big year for production, with a cumulative new capacity of 10.4 million tons by the end of this year, with an increase of 70% compared with the same period last year. A total of 5.8 million tons of production capacity is planned to be put into operation next year, but it may be concentrated in the fourth quarter, so there is uncertainty about whether it can be put into operation.
With the substantial increase of domestic PX new capacity, import dependence will be significantly reduced. This year's import dependence has dropped to about 50%, and next year it is expected to further fall to about 45%. On the one hand, domestic production will increase, and on the other hand, import volume will decrease.
Obviously, after the centralized production of PX in China, the proportion of China's PX production capacity in the world exceeds that of Northeast Asia for the first time. According to the import data from January to October this year, South Korea and Japan are still the main sources of China's PX imports, and these countries will face great pressure in the future.
From the perspective of PX plants put into operation in China and planned to be put into operation this year and next, the capacity of single set of PX units is significantly higher than that of several major PX import source countries in China, that is to say, the unit production cost of China's PX units will be lower than that of existing foreign plants in theory, and the competitiveness is beyond doubt. Moreover, the price gap between Japan's naphtha unit and that of Korea's naphtha unit, which was once the lowest in March this year, has not been able to keep pace with the low level of PX in the middle of 2014, and then the price gap between Japan and PX is too low It rebounded to a reasonable level and maintained until the first quarter of this year. As a big PX exporting country, Japan and South Korea have enjoyed the benefits of high profits for four or five years. However, the era of making money by lying down will not exist next year or even after. The upstream PX link is bound to have the possibility of industrial integration, and the devices with short process and weak competitiveness will be eliminated first.
(2) the domestic PTA production expansion cycle is coming, and the processing cost will remain low next year
From the perspective of PTA, after de stocking in the past few years, the absolute inventory and the inventory consumption ratio of PTA in China are all at a low level. In December 2018, the inventory reached a phased low of 750000 tons, and the inventory consumption ratio was only 0.2 months. Subsequently, the inventory and inventory sales ratio gradually increased. The inventory volume for most of this year was between 1.3-1.5 million tons, and the inventory consumption ratio was between 0.3 and 0.4 months This is higher than the same period last year. However, with the centralized production of new domestic PTA capacity, the future absolute inventory and inventory sales ratio will continue to rise.
However, PTA will enter a new round of domestic capacity expansion of 2.4-10 million tons in 2015, after which the domestic production capacity will only increase by 2.4 million tons in 2018.
Due to the low growth rate of production capacity in the past few years, the spot processing fee of domestic PTA has gradually increased since 2016, and the average processing fee this year has exceeded 1000 yuan / ton, which has reached a new high since 2011. However, as the expansion cycle has become a foregone conclusion, next year's PTA spot processing fee will be significantly lower than this year. It is expected that the processing fee range for most of the time will be between 400-600 yuan / ton, which is to return to the level during the period of de capacity in 2014-2016.
If the processing fee is maintained in the above range next year, a new round of capacity elimination will begin based on the advantages of large single set of production capacity and low cost. The scenario of 2012-2015 is expected to reappear. At that time, 5.55 million tons of domestic production capacity was completely eliminated, and 7.15 million tons of capacity was shut down and restarted.
From the perspective of MEG, the centralized production of coal chemical industry in the third and fourth quarters of last year led to a sharp drop in MEG prices at home and abroad, and the cash flow of various MEG manufacturing processes was obviously compressed. In particular, the cash flow of mainstream naphtha to MEG was rare, with a maximum loss of nearly $100 / T. In addition, the cash flow for most of this year is negative, whether it is external ethylene recovery, internal external ethylene recovery or internal MTO process, which shows that the domestic new capacity has formed obvious pressure on MEG enterprises.
However, there will be more units planned to be put into operation at home and abroad next year. In addition to coal chemical industry, the integration of refining and chemical industry and the commissioning of ethane cracking unit will intensify the competition pattern of domestic MEG market. According to the forecast data of CCF, 8.768 million tons will be put into production at home and abroad next year, 6.49 million tons will be added in China (2.94 million tons of syngas and 3.55 million tons of integrated gas) and 2.278 million tons of foreign countries will be added.
Due to the obvious cost advantages of the newly put into operation units, especially the integrated refining and chemical plants, it may force some of the early stage coal chemical plants to withdraw and the new coal chemical plants to be put into operation. Although the new capacity of MEG is lower than 6.5 million tons in the past year, it will be more stable to take into account the actual production capacity of 6.5 million tons in China.
In addition, with the gradual increase of domestic MEG production capacity, MEG import dependence will also gradually decline. However, considering the cost advantages of some foreign ethane cracking units, the import dependence may still exceed 50%.
According to the existing domestic and foreign MEG production capacity distribution, China's production capacity accounts for nearly 40%, followed by Saudi Arabia's 18%, the United States and Taiwan's 7%. From the perspective of production process, Saudi Arabia, Kuwait, Canada and the United States have unique advantages in the raw material end, and the production cost of cheap natural gas is significantly lower than that of other countries. According to the import data from January to October this year, 45% of MEG imported from Saudi Arabia, 10% from Canada and 5% from Kuwait. In addition, the three sets of plants put into production in the United States this year all adopt ethane cracking process, and their target sales customers are China. With the improvement of relations, the import volume of MEG from the United States may gradually increase in the later stage.
After reaching a record high of nearly 1.43 million tons in April this year, MEG inventory in the port area of East China continued to decline unilaterally. By the end of the year, the inventory had dropped to a historical low of 400000 tons. Under the background of the industry chain being bearish, both traders and downstream demand enterprises have adopted the strategy of low inventory. In addition, the delay of unloading at the port has resulted in the low circulating source of goods This greatly increases the price volatility. Since the beginning of this year, Meg's short-term stock price is very easy to reflect the short-term stock price of MEG.