What Is The Trend Of PTA And Ethylene Glycol In Polyester Industry Chain?

PTA and ethylene glycol (MEG), as the two brothers in the polyester industry chain, are affected by the sensitive nerves of the industry chain.

Since January, the trend of the "two brothers" has deviated significantly, leaving many investors confused.

According to the insiders, the difference between PTA and MEG market is significant. The root lies in the fact that the supply and demand cycle of the two industries is different. PTA is still in tight supply and demand cycle, and MEG has entered an excess cycle. The price performance is strong, and one is still showing a weak rebound after the fall, and the corresponding price difference between PTA and MEG is also strong.

The "two brothers" of the same clan are different.

From the beginning of January to the trend before the Spring Festival, PTA is in an upward stage, rising by 19%, while ethylene glycol is only about 5%. The corresponding price difference between PTA and MEG has expanded from 500 yuan / ton to more than 1300 yuan / ton. After the festival, the difference between the two prices is the highest, which is more than 1500 yuan / ton.

"Since January, the price center of PTA and MEG has increased at the same time. The main reason is that the price of polyester in the downstream is low, the weaving factories are ready to stock up, and the cost of industrial chain and the consumer end keep pace with each other, driving up the price of polyester raw materials.

But judging from the persistence of gains and gains, MEG is far less than PTA. "

Pang Chunyan, an analyst at China investment and Anshun futures bank, said that in early January, MEG was at a minimum of 5046 yuan / ton, reaching 5457 yuan / ton in late January, but it was only a one-day tour.

At the end of February, MEG climbed to 5330 yuan / ton and then continued to fall, to a minimum of 5007 yuan / ton, after a record low.

PTA rebounded steadily from a low of 5560 yuan / ton to a maximum of 6738 yuan / ton, with a rebound of over 20%. After the Spring Festival, there was a lack of new profits to start the adjustment, but up to now the maximum adjustment is less than 500 yuan / ton.

From the perspective of industry chain, the relationship between PTA and MEG can actually be defined as "homologous non homologous", and the source of the two sources is different.

According to the futures Daily reporter, PTA is currently only oil material, MEG can be obtained from three channels of oil, natural gas and coal, PTA is the downstream products of aromatic hydrocarbons (specifically p-xylene) in naphtha, while MEG is the downstream product of naphtha alkene (specifically ethylene).

Therefore, from the perspective of raw materials, PTA and MEG can be considered as different sources.

However, PTA and MEG are two kinds of raw materials for synthetic polyester, and the consumption of more than 90% of the two products is concentrated in the field of polyester. Therefore, from the perspective of downstream consumption, the two can be considered as a common ancestor.

It is precisely because the two parties are "different from the same origin" that they sometimes show signs of synchronization and sometimes deviate from each other.

The key is to see where the contradiction between supply and demand is.

In the interview, futures Daily reporters found that the market in the early January was generally better than the MEG in terms of the overall fundamentals of PTA.

At present, polyester industry chain, PTA benefit from crude oil and raw materials PX price increases brought about by the cost side to promote performance is strong, MEG is constrained by port inventory high pressure continued weak performance, the two markets appear ice and fire double sky situation.

"The two most important factor is the stock."

Yide futures analyst Zheng Youfei said that PTA's inventory is relatively low in recent years, while MEG's port inventory is relatively high in recent years, while port liquefied stock inventory is full.

From the perspective of basic expectations, the capacity growth rate of PTA in 2019 is limited, while MEG is facing huge domestic and foreign production capacity in 2019. At present, the overall domestic construction is at a high level. The increase in peripheral capacity has led to stronger imports and higher port inventory. However, there are no large-scale domestic overhaul plans except for a few sets of overseas devices.

Moreover, from the perspective of supplier pricing power, the PTA plant has already formed oligopoly, and the control over supply and demand and price is stronger than that of MEG plant.

"In the MEG inventory did not appear under the background of difficult to see the trend of rising MEG driven, and the current reason for supporting MEG prices is that the sharp decline in early MEG MEG coal chemical industry quickly approaching the cost, and MTO, ethylene technology began to lose money."

Zheng Youfei said.

The two widening spreads reflect fundamental differences.

According to the insiders, the difference between PTA and MEG market is significant. The root lies in the fact that the supply and demand cycle of the two industries is different. PTA is still in tight supply and demand cycle, and MEG has entered an excess cycle. The price performance is strong, and one is still showing a weak rebound after the fall, and the corresponding price difference between PTA and MEG is also strong.

In the survey, futures Daily reporters found that the price difference between PTA and MEG has undergone two rapid expansion since the second half of 2018. The spread of the price difference between the two countries has expanded to near the level of water in a short time from the level of -1300 yuan / ton, and then the weak oscillation has started to expand to the current level of 1300 yuan / ton until the end of 12.

"The performance of its spread is actually based entirely on its own fundamentals."

Yu Yongjun, an analyst with Huatai futures, said that because PTA and MEG share a common downstream polyester, its price trend has a high correlation, but the difference between PTA and MEG depends on the characteristics of their fundamentals and volatility.

In his view, because the volatility of MEG is high and the degree of import dependence is large, the fluctuation of the price difference between 7 and August basically depends on the fluctuation of MEG price before 2018.

However, with the fluctuation of PTA and the deterioration of MEG fundamentals from 7 to August in 2018, the fluctuation of the spread of the two prices also gradually declined, depending on the fluctuation of PTA price.

"Although the price difference between them fluctuates violently, it is also very reasonable, which is more consistent with the evolution of supply and demand."

Yu Yongjun said that before 2013, PTA was actually more expensive than MEG, but with the PTA supply and demand entering the surplus cycle, PTA often fell below the MEG price. In the second half of 2018, the price differential relationship was completely reversed.

In fact, from the historical trend of the spread of PTA and MEG, since the second half of 2013, due to the huge expansion of PTA's new capacity, the PTA market has entered a serious surplus stage, and because of the relatively limited domestic production capacity, the supply and demand pattern is relatively tight, and the price difference between PTA and MEG has gradually entered a negative stage.

At the middle of 2018, the price difference between PTA and MEG was always in the range of 0 to -3000 yuan / ton interval.

"At this stage, the price trend of MEG has always been stronger than that of PTA, but since August 2018, domestic and foreign MEG production capacity has expanded significantly, and MEG has entered the stage of relative surplus capacity. PTA has experienced a capacity expansion period from 2012 to 2015, and the new capacity expansion period will not arrive until 2020.

At the same time, the new capacity expansion of raw material terminal PX also needs to be realized in the second half of 2019. Therefore, since the fourth quarter of last year, the strong and weak relationship between PTA and MEG has been greatly reversed, and the price trend of PTA has always been stronger than that of MEG, resulting in a sharp increase in the price difference from -1350 yuan / ton to the recent 1500 yuan / ton.

Wang Tingfu, a futures analyst at Soochow, told futures Daily reporters.

For the performance of the two markets and spreads, the market participants think that the current limit is close to the limit of price difference. The underlying logic behind this is that the supply and demand of PTA in 2019 is relatively tight. In the first year, the market took PTA as a multi head configuration, and the MEG market entered the new round of production commissioning since the fourth quarter of last year. Its supply pressure has gradually increased, and port stock has also accumulated to the highest level in the calendar year. The market is pessimistic about the price of MEG.

In this context, multi PTA MEG is also the preferred position for institutional or hedge arbitrage funds.

"In fact, the relationship between the two fundamentals before and after the MEG futures market has been determined. The widening of the spread between PTA and MEG reflects the differences between the two fundamentals."

Pang Chunyan said, but this difference will not continue.

The MEG market is fully reflected. When prices are low, if the equipment is repaired and downstream consumption is picked up, MEG will have a strong elasticity when buying value.

"Mainly due to the large number of traders participating in the market, the price fluctuation will be greater, and the price difference between the two will be phased at that time."

In Yu Yongjun's view, the supply and demand rate of PTA will be more and more tight this year. Compared with most other commodities, it will be more powerful and the overall profit will be better and better.

While MEG is still in the first half of the surplus cycle, it is expected that the annual performance will be weaker in the whole commodity, and the corresponding production profit will not be better.

"However, there is a chance that there will be a wave of stage rebound. The overall demand in 3 to August is at a relatively high level, and the supply is expected to shrink at this stage after the profit continues to be weak. There will be a clear round of inventory conversion, and prices and profits will rise accordingly."

The key to the two market lies in the supply of cash.

During the interview, the futures Daily reporter learned that the spread of PTA MEG spreads was the result of the widening of the price gap between the two prices.

However, as the price of PTA continues to rebound, the supply and demand base will increase considerably, and the cost side will be good and marginal. The price of PTA will continue to rise sharply. So the sustainability of PTA and MEG's duality is also questioned by the market.

"Although MEG port storage pressure is relatively large, but with the spot price of MEG coming to the bottom of the 5000 yuan / ton pass, the factory price of the inland coal MEG enterprises has dropped to below the marginal cost line. The mainstream MEG installations in eastern China also have load reduction operations. The late supply of MEG will have marginal tightening expectations, and the demand for polyester and terminal weaving will gradually start at the end of this month, and the MEG supply and demand fundamentals will be improved.

Wang Tingfu said the situation of PTA and MEG will not last long.

However, in the view of GF futures analyst Zhang Xiaozhen, in the current situation, the state of PTA and ethylene glycol "ice and fire" will probably continue.

"The supply side of PTA is superior to that of MEG.

Judging from the current inventory level, the PTA social inventory is at a level of 1 million tons, which is still at a low level compared with previous years. The MEG port stock has reached 1 million 190 thousand tons, at a historical high level, and the pressure of MEG oversupply is more obvious for MEG price suppression.

Zhang Xiaozhen said.

Respondents generally agreed that whether the price difference between PTA and glycol continued to expand in the late stage depends on the timing of the launch of PX's new capacity in the country, the progress of MEG's new production capacity and the launch of PTA's new capacity at the end of the year.

"Domestic PX new capacity delivery, from the current understanding of the situation, the two quarter of Hengli PX device may have a trial plan, initially may have little impact on the market supply and demand side, but the supply and demand of PX will gradually become loose in the second half of the year, and the corresponding PX price will also be weakened, so the center of gravity of PTA will also move down with the cost, when the price difference between PTA and ethylene glycol will have certain convergence."

Zhang Xiaozhen said.

In addition, the new capacity of MEG and PTA has great uncertainty in terms of time and magnitude. The difference between PTA and ethylene glycol will be affected by the respective capacity of the two suppliers.

In the long run (after 2020), as PTA and raw materials PX have a large number of new capacity to launch, PTA will also face the situation of oversupply and cost down, and the price of PTA and MEG will probably shrink significantly.

"For PTA, the core of the late focus is mainly on the progress of the PX launch and the scale of the PTA stage maintenance. As a whole, the supply and demand of PX is difficult to get rid of before the PX is fully released, and the corresponding cost side performance is expected to be stronger.

However, constrained by PX, PTA profits are easily eroded by raw materials, and PTA supply also shrinks, which ultimately affects the balance between supply and demand of PTA.

Yu Yongjun said that MEG mainly comes from the excess pressure caused by the mismatch of global supply growth and demand growth.

In his view, demand side has been hard to reach the high level in the past two years, and more MEG new devices were put into operation in late last year. The time for fully releasing the supply is mainly from this year.

At present, MEG inventory has reached the highest level for many years. Later, the supply side needs to be contracted to improve the balance between supply and demand. More attention should be paid to the overhaul of domestic and international devices.

In view of the late PTA and MEG industry chain market expectations may be strong and weak pformation, Zhang Xiaozhen believes that the strategy of buying PTA throws MEG may still be effective in the short term, but in the medium term (before and after the Hengli refining and refining PX delivery), it should be adjusted in time.