Post-Holiday, China's PTA Market Improves

Market News

Post-Holiday, China's PTA Market Improves

January PTA output of China was about 3.1 million tons, up 0.15 million tonne month-on-month. With import volume expected to be 30 KT, China PTA supply may increase by 3.13 million tons, owing to favourable margins, most PTA plants kept high operating rates, running at full or over capacity.

As for demand, the output of polyester products totaled about 3.2 million tons, consuming 2.752 million tons of PTA, plus about 80 KT of PTA consumed in other application fields as well as 40-50 KT of PTA exports, PTA demand totaled about 2.83 million tons. Thus PTA supply outnumbered demand in January and PTA inventory increased by about 250 KT.

In February, PTA output is assessed to 2.7-2.75 million tons and polyester operating rate may be averaged to about 79% so PTA inventory may increase by 200 KT this month.

PTA supply and demand may keep a loose balance in March but if Yisheng Dahua or Hengli starts maintenance, PTA inventory may decrease. March polyester operating rate is assessed to 85-86% here.

PTA inventory piled up during Chinese New Year holiday, up by about 200 KT. The amount of PTA cargos on the way increased obviously with small increment in port and warehouse. In terms of regions, Dalian and Ningbo marked bigger increases. As to warehouse, the increment mainly lied in Zhangjiagang, Ningbo and Hangzhou while PTA inventory in polyester decreased by 1-2 days.

The tone of macro environment changed after holiday and commodities, especially chemicals, turned soft. With PTA prices ticking up and margins widening, some may make profit-taking and PTA uptrend may be curbed. Polyester plants expressed modest buying interest in the first half of February.

However, from a long term point of view, PTA supply and demand pattern may be optimistic in the first half of 2017. Though Yuandong and Pengwei plan to restart but Yisheng's turnaround will cancel that impact. Meanwhile, PX turnaround scale in Q2, 2017 was bigger than that of previous years, which may be an opportunity for PTA market.