What Is The Impact Of Sino US Relations On PTA Price?

The long-lasting Sino US trade friction in 2018-2019 must still haunt us.

Although in 2019, with the increase of communication between China and the United States, in early 2020, China and the United States began to shake hands and reach an agreement. However, with the development of the new epidemic in 2020, Sino US relations are tense again. Especially after the Sino US cross-border consulates, Chinese investors' concerns about the "unreliable" style of US President trump are heating up again.

When does the price of PTA affect the market. We selected 10 important time nodes from 2018 to 2019 to mark the year-on-year chart of PTA main contract price and export delivery value. Gray represents bad news and pink represents good news.

It can be seen from the figure that Sino US trade friction does have a more obvious impact on exports. After entering 2018, the value of export delivery decreased significantly year on year. After a brief truce between China and the United States, there was a brief rebound in exports in the first quarter of 2019, but then with the continued increase of tariffs, exports fell again.

However, how much of the impact of terminal export will be transmitted to the upstream PTA of textile and clothing? We can see from the price changes of PTA itself that in fact, Sino US trade friction has more emotional impact on the market. For example, after the "xite club" at the end of June 2019, in two or three trading days, the contract price of pta1909, which was slightly weak at that time, was directly pushed up from 5900 yuan / ton to 6600 yuan / ton, and then quickly fell back, opening a long bear market.

Therefore, PTA is particularly sensitive to changes in Sino US relations. According to the data calculation in 2019, China's clothing and textile exports totaled US $271.89 billion, while the domestic wholesale and retail sales of clothing, shoes and hats, needles and textile categories above the quota in that year totaled 1122.6 billion yuan, and the total export delivery value of the textile and clothing industry and the textile industry amounted to 838.632 billion yuan. It can be seen that exports still occupy a large share in the terminal market. From the data of 2016-2019, this situation does not change much. Due to the fact that China and the United States reached the first stage of economic and trade agreement, in fact, the final tariff on textile and clothing was not imposed, so the terminal export was not significantly affected.

Now, the change of Sino US relations once again makes investors worry about the export demand in the future market. Two years ago, the two sides of the trade are not willing to move according to the situation of the textile market friction. This is the last part of the US tariff increase. Because textile and garment industry is really related to people's livelihood, it is not wise to impose high tariffs on people, which will make people have to pay for it, thus affecting people's daily consumption. Therefore, the relationship between China and the United States is not the biggest factor affecting the export of textile and clothing. What investors should really worry about is that the epidemic situation in the United States has not improved, and whether the U.S. clothing consumer market still needs a lot of textile and clothing products from China.

From the perspective of PTA's own cost, the recent international crude oil price fluctuates. Although the crude oil price reduction plan of China and the United States has been effective in stimulating the growth of crude oil prices in the early stage, the oil price reduction plan of China and the United States has continued to be effective under the influence of the oil price reduction plan of China and the United States. Moreover, the research and development of new crown vaccine has made great progress, which has stimulated the international crude oil price to a certain extent. On the other hand, PTA has a strong support for the external market.

From the supply side, Luoyang Petrochemical's 325000 ton unit was shut down for maintenance on July 27, and Jiaxing Petrochemical had not been restarted after shutdown on July 12. As of July 30, the weekly operating rate of PTA was 83.75%, still at a high level. However, compared with the situation of overhauling in August, the surplus supply of PTA is still limited. In addition, Shanghai Yadong Petrochemical Co., Ltd. also joined the army of maintenance in August, and planned to stop for maintenance for about 3 days at the end of August. If the maintenance plan in August can be carried out normally, it is expected that the operating rate will be lowered, and the accumulated pressure of PTA will be relieved, or a small amount of storage will be removed.

From the perspective of demand, as of July 30, the comprehensive operating rate of polyester was 88.54%. Due to the recovery of some parking devices in the early stage, the operating rate rose. However, the weaving operation rate continues to decline. Under the influence of epidemic situation and traditional off-season, weaving orders are difficult to get out of the downturn. Weaving enterprises are not active in production, and inventory of downstream links continues to accumulate.

On the whole, PTA Market in July can be described as flat, less device changes, PTA oversupply pattern did not reverse. In August, PTA supply side maintenance is expected to increase. If the maintenance plan can be fulfilled as promised, the dull PTA market may usher in a turnaround.

Of course, we should also see the positive side. China's economy is slowly recovering.

1. The profit growth rate of industrial enterprises has changed from decline to increase. According to the data released by the National Bureau of statistics on July 27, the profits of industrial enterprises in the second quarter increased by 4.8% year-on-year, and decreased by 36.7% in the first quarter. Especially in May and June, the profits increased by 6.0% and 11.5% respectively, and the growth rate accelerated month by month.

2. For the first time in this year, the total operating revenue and total profit of state-owned enterprises increased year on year. According to the data released by the Ministry of Finance on July 23, the total operating revenue of state-owned enterprises increased by 7.1% in June compared with the same period last year, and the total profits increased by 6.0% compared with the same period last year.

3. For the first time, the central enterprises realized the positive growth of monthly net profit. According to the data released recently by SASAC, the net profit of central enterprises in June reached 166.48 billion yuan, an increase of 64.63 billion yuan compared with may, a year-on-year increase of 5%. This is the first time that positive monthly net profit growth has been achieved this year. Positive profit growth means that these enterprises are making more and more money, which also confirms the sustained recovery momentum of China's V-shaped rebound.

At the same time, domestic textile enterprises are accelerating the survival of the fittest. According to the survey of textile enterprises in Shandong, Hebei, Guangdong and other places, since July, some small and medium-sized enterprises have started to worry. But there are still some strong, high-tech enterprises are still accelerating the development, these enterprises seize the market gap left by the withdrawal of small and medium-sized enterprises.

In fact, the market has ushered in a turning point and is waiting for an opportunity. It may be from September to October of the "golden nine silver decade"; it may be after the overseas epidemic situation has been controlled; it may be when the Sino US trade dispute has made some progress. In short, just as we feel the pressure is coming, market opportunities may be coming.