Cost Support To Collapse Production Reduction "Big Trick" Did Not Work

The market is only crude oil.

As the source of energy chemical products, crude oil plays a decisive role in the global commodity market.

However, crude oil prices have fluctuated little in recent years, and the polyester has not been disrupted.

The rhythm of its own operation.

However, in the war of no smoking caused by the collapse of crude oil in 2014, the market began to look only for crude oil.

The suppression effect of crude oil on the downstream has increased unprecedentedly, and the market's attention to the trend of crude oil has reached the highest point since 2008.

From our visit, polyester factories' expectations of price movements depend on the trend of crude oil. The decline of the crude oil "unspeakable bottom" has completely disrupted the original structure of the domestic chemical sector.

Here, we will not go into the political game of the "three strong powers" and who will be better. Nor will we analyze the impact of the macro-economy and the rise of the US dollar on crude oil. Apart from the political attributes and financial attributes of crude oil, the single factor on the commodity attribute is that the supply of crude oil is too serious. This factor undoubtedly gave the market a head start. Brent crude oil fell five years after breaking through the 60 US dollar / barrel mark.

The first drop of crude oil since the summer of 2014

The factory has brought hope, and the cost is falling faster than polyester products.

However, "Cheng also Xiao He, defeated Xiao He", the OPEC Conference on non production cuts triggered a crude oil overspeed switch, with a combination, resulting in polyester plant profits shrinking.

Oversupply of crude oil, PX, PTA and polyester are also facing the problem of overcapacity. How to stabilize production and ensure profits is a major problem in the downstream factories of crude oil.

Faced with the collapse of upstream costs and the expansion of its own losses, the PTA factory again cut production in early December 2014.

However, at this time, the effect of this reduction is far less than that of May.

The main reason for the failure of production in December was high PTA inventory.

In May, before the three giants had limited production and insured prices, the PTA factory had gone through the process of reducing production to inventory in March, while the reduction in December was just a process of purely destocking, which did not result in tight supply.

Moreover, the reduction of production involves more capacity, but the intensity is greatly reduced.

The reduction in production began in May, which lasted for 3 months. After the inventory was digested, the spot supply was affected, while the reduction in production lasted less than half a month in December.

In addition, due to the timing of discontinued production, the reduction in production in December had no significant impact on PTA futures contracts in January and May.

The reason why PTA once again cut down is not the turning point. The most fundamental reason is profit.

The original intention of the PTA plant's reduction is to get a slice of the profit from the downstream polyester links, and at the same time to send a signal of stabilizing the market when the crude oil slump, so as to enhance the bargaining chip with the PX factory.

Judging from the profits of all sectors, the price difference of naphtha -PX has been above $300 / ton since May 28, 2014, and rebounded to $344.25 / ton after hitting $319.13 / ton in December 2nd, and the naphtha PX link is still profitable.

On the other hand, in May, during the two month period from the middle of March to the end of May, the price difference between the two parties has been under 300 US dollars / ton. The expansion of the loss has accumulated momentum for the reduction of production and price rise.

The profit of the PX PTA link is calculated according to the processing fee of 720 yuan / ton. Since November 17, 2014, the average profit level of the PTA factory has reached the balance of the month, so in December, with the profit of PTA factory being continuously repaired, the reduction of production intensity was also greatly reduced.

The current situation of oversupply has not changed since the "smoke bombs" of production reduction have been dispersed.