Suzhou Futures: Sluggish Demand For &Nbsp; Limited Space On Top Of PTA

Look back PTA This week, TA1009 continues to be constrained by the 20 day moving average. It is almost impossible to expect PTA to rise rapidly in July. Weak demand is the biggest factor for PTA to get rid of its current predicament. Production profit per ton of thousand yuan also provides a downward space for PTA prices. Selling short and buying FU to throw TA is still the recommended operation strategy at present.

Economic recovery Tortuosity Exceeding expectations

In 2010, the world economy as a whole continued the trend of good recovery in 2009. However, the seriousness of the impact of the international financial crisis and the tortuosity of economic recovery all exceeded the original expectations. The sovereign debt crisis, the credit shortage of the banking system to the real economy, the high unemployment rate and trade protectionism and other factors make the market worried that the economic recovery process will slow down. Although market expectations of inflation still exist, they are obviously not as strong as they did at the beginning of the year.

　　 debt crisis The proliferation has made the euro zone adopt fiscal tightening measures in exchange for capital market confidence, and its side effect is to hinder economic recovery and improve the unemployment rate. The outbreak of the debt crisis in the euro zone delayed the expectation of the market to raise interest rates for emerging countries. But in the face of the rise in labor costs, speculation in the commodity market and the urgent need to adjust the economic structure, interest rate rises remain as high as those of Damour Cris.

Following the United States, Europe is also trying to implement more stringent financial supervision measures. Strengthening financial regulation helps to control risks, but supervision will inevitably reduce banks' leverage and pose a negative impact on credit recovery, risk asset prices and bank profitability.

In short, the path of global economic recovery is still uncertain. Hedging demand will not allow gold and the US dollar to slide rapidly. In addition, European countries have announced cuts in fiscal expenditure and have been holding their pockets. The tightening policy of China and other emerging powers has started and commodity prices will continue to bear pressure.

Two production profits are obviously higher.

The late trend of crude oil, the tropical storm concerns and the peak oil consumption in summer will bring seasonal support to oil prices. The Gulf of Mexico oil spill event will also push up the cost of crude oil production and reduce the daily output of crude oil, but the US dollar will not continue to weaken. The US crude oil inventory is still at a high level as a whole, and the worry of slowing economic growth will also offset the support of these factors to a certain extent. In the three quarter, international oil prices may rebound to 85 - 95 US dollars / barrel, but the possibility of returning to the top 100 dollars in the medium and short term is not very likely.

The temporary stabilization of oil prices will give short term support to naphtha and PX prices, but it will not have much effect on PTA prices. Production profit per ton per thousand yuan is the most important factor resulting in interruption of cost conduction. According to the July 7th PX's CFR China / Taiwan LC30-45 day spot price, the production cost of PTA is about 5600 yuan / ton, and the PTA price index for the same day is 7020 yuan / ton, and the profit per ton is above 1000 yuan. In the industrial chain of crude oil, naphtha, PX to PTA and clothing textile, too much PTA production profit margin has weakened the supporting role of upstream cost to PTA price, and restricted the upper space of PTA.

Three PTA supply pressure has not yet been alleviated.

The high positive cash flow has brought positive incentives to PTA manufacturers. Since April, the operation load of domestic PTA devices has been around 90%. In the face of the current market situation, the PTA spot business has a very high enthusiasm for setting up insurance, which can be verified by the change of PTA inventory in Zhengshang. Since late March, the number of TA warehouse receipts and the total effective forecasts of Zhengshang has remained at more than 30 thousand, compared with the number of warehouse receipts less than 5000 in the same period last year. High futures inventories and high PTA production enthusiasm will make PTA supply pressure difficult to mitigate unless the PTA price falls sharply, prompting the PTA plant to jointly stop and overhaul. In addition, Jiangyin Cheng Xing Industrial Group Co., Ltd. plans to open a 640 thousand ton / year new PTA device in September, which will impact the spot market.

In addition, according to the provisions of the validity period of the standard warehouse receipts by Zheng Shang, the registration of PTA standard warehouse receipts before the twelfth trading days (excluding those days) in September will be completely cancelled before the fifteenth trading days of the month, which will inevitably bring a certain degree of psychological pressure to the market.

Four weak demand is the biggest factor for PTA to get rid of its current predicament.

From the perspective of demand peak season, textile exports and cotton prices, the author is cautious about the PTA demand in the coming months.

Entering the July, textiles are in the low season of seasonal demand. Compared to April, the loom operating rate in Jiangsu and Zhejiang has dropped from 80% to 70%. Although the gross profit of polyester products is good, the start-up rate of polyester plant is still at 80% level, but this is mainly affected by the power cut and the spot price of cotton, and will not bring much benefit to PTA. The slump in demand and the slump in the production of chemical fiber enterprises will reduce the demand for PTA, which is bound to feed upstream. The pressure on PTA factories will continue to increase.

In May, China's textile and clothing export figures were better than market expectations. However, in the face of the euro zone debt crisis, the appreciation of the renminbi, the rising cost of labor, and the competition between Southeast Asian countries, the latter export may slow down. From the current data, the EU still occupies 20.16% of China's textile and garment export market. Because the European economic outlook is still uncertain, the European debt crisis has not been completely eliminated, and the export of textiles and clothing to Europe in the second half of this year will probably slow down. Domestic labor costs are rising significantly, which will force some textile industry orders to turn to emerging markets such as ASEAN and Latin America. China's textile industry competitive edge is gradually declining. The RMB exchange rate reform has been restarted under the pressure of internal and external pressures, and the textile and clothing exports have been overshadowed by the expectation of appreciation. Although the cross-border expansion of cross-border RMB trade settlement to all countries will partially offset the negative effect of RMB appreciation on the formation of PTA, it needs a process.

The impact of cotton price trend on PTA demand can not be ignored. Affected by the tight supply, the current cotton prices are strong. In July 7th, the CC index 328 index of China cotton was 18414 yuan / ton, up 1951 yuan / ton compared with May 4th. The price difference between polyester and cotton has risen from 5913 yuan / ton to the current 8934 yuan / ton. From the perspective of substitution, the advantage of polyester and short is more obvious. This widening price gap has increased the demand for short and short market, thus bringing price support to PTA. However, concerns about the slowdown in textile and clothing exports and the risk of throwing away cotton and other factors in the country are shaking the foundations of cotton bull market. Cotton market is likely to weaken. This indicates that cotton prices are difficult to continue to form price support for polyester, short and PTA.

Five "buy FU throw TA" portfolio can continue to hold.

Prudent investors may still be at a loss as to the current market environment. Waiting for the "sunny weather after rain" is painful. The spread of price may be a good choice. As the two Petrochemical futures varieties in Zhengshang and the previous period, the correlation and liquidity of fuel oil and PTA have already met the requirements of price difference trading. In recent years, the research and practice of spread trading between PTA and FU are constantly emerging, and the market has gradually accepted this operation.

We know that price is a direct reflection of the basic relationship between supply and demand, and the price difference is a direct reflection of the fundamental strength of each species. Therefore, behind the spread is actually the future situation of the basic varieties. In terms of PTA and fuel oil, the cost homology, the high profit of PTA production and the weakening of PTA demand have created the basis for the current "buy FU throwing TA" operation.

The ratio and price difference between TA1009 and FU1009 have been weakening since the beginning of April. In April 1st, the ratio and price difference between TA1009 and FU1009 were 1.81 and 3859 respectively. As of July 8th, the above values decreased to 1.68 and 2931 respectively. At present, the above value is still in a downward channel, and the combination of "buy FU and throw TA" can still be held. This transaction will enable us to get rid of the investment trouble caused by the crude oil price oscillation and get the price differential return. Profit is most likely to be realized in 7 - August. During the two months, the peak season for PTA autumn has not yet started. The hurricane season and the peak season of oil demand are still continuing.

To sum up, PTA is still in the "three high" situation of high profit, high opening rate and high inventory, and the market is worried about policy tightening and foreign trade situation. If crude oil price does not rise sharply, PTA will still be dominated by weak market trend before the arrival of 9 to December. Operation, still can try to rely on 7500 points high empty, for "buy FU1009 throw TA1009" combination can also be held cautiously.