Global PTA contrarian strong regional differentiation is obvious

Asia is the core of the global PTA market, and the recent supply-side contraction has exceeded the expectations of most market participants. Many sets of mainstream PTA devices in China have entered the maintenance or negative reduction stage, and the starting load of the device has dropped to about 56%, which is the low level in recent years. The overall supply of the region is in a tight state.

The rest of Asia is also facing supply tightening. South Korea Hanwha and Vietnam NSRP and other devices have been restarted, however Thailand PTTGC and South Korea SK and other operating devices have maintenance or reduction plans.

The effect of supply contraction has been transmitted to port inventories. After extensive inventory removal from might to July, PTA inventories in major Asian ports have fallen to comparatively low levels.

The European PTA market is experiencing both supply shortages and trade policy adjustments. In the past few months, the supply of PTA in Europe has continued to be tight, and the shortage of imports has exacerbated the shortage. The recent shortage of PTA raw materials has led a number of European polyester manufacturers to declare force majeure or decrease the operating rate, the PET bottle and polyester fiber production to form a direct constraint.

Changes in trade policy have further reshaped the supply landscape of the European market. The European Commission has imposed provisional anti-dumping duties on PTA originating in South Korea and Mexico since April 10. This policy not only immediately pushed up the cost of importing PTA in Europe, however also objectively aggravated the tight supply in the European market.

It is worth noting that European polymer prices have risen sharply due to geopolitical conflicts and energy inflation. The effect of supply tightening is transmitted upstream along the manufacturing chain, and Asian PTA export prices have risen as a result. The opening of the arbitrage window is attracting some Asian sources to Europe due to significant price differences between the European market and other regions.

The Middle East is the biggest uncertainty in the global PTA market. Affected by the geopolitical conflict, the PTA installation in the Middle East continues to stop, which is expected to affect the import to Hong Kong from August to September. Chemical vegetation such as methanol and ethylene glycol in the Middle East have been fully shut down, and the chemical operating rate has dropped to almost zero.

It will take some time to the Middle East installations to return to healthy. The closure of the Strait of Hormuz might further limit the room to lifting of future installations. The prolonged absence of supply in the Middle East is leaving a gap in the global PTA supply and demand stability sheet that is difficult to fill. Some analysts pointed out that the impact of the continuous shutdown of the Middle East plant on the global PTA supply pattern will be structural. Global traders are accelerating the transfer of goods from Southeast Asia and the Americas to fill the gap in the Middle East, further tightening supply in other regions in the short term.

The American market is also deeply affected by changes in trade policy. The European Union imposed a 25.7 per cent anti-dumping duty on Mexican PTA, immediately hitting Mexican exports to Europe. At the same time, the U.S. market continues to be affected by the U. S.-Iran conflict, with crude oil and PX costs evaporative. The North American market is also under pressure from rising raw material costs, and some US polyester producers have begun to assess the feasibility of importing PTA from Asia.

In the short term, the global PTA market "near strong far weak" pattern is difficult to reverse. Early August is the most tight supply phase, in the low inventory and low operating rate of the dual support, PTA prices have strong toughness. However, the downstream polyester thorough operating rate is only about 80%, polyester inventory has reached the middle, if the terminal orders continue to be weak, polyester operating rate there is room to further downward adjustment, will limit the PTA's rising space.

however the medium-term risk of the PTA market is accumulating. A number of units are scheduled to restart in mid-to-late August, while crude oil and PX cost-side support might weaken if the situation in the Middle East eases. In addition, downstream polyester demand is still in the traditional off-season, terminal orders are insufficient, the demand side is difficult to form a sustained rise relay in the short term.

to global PTA market participants, the progress of device restart, the evolution of the geopolitical situation in the Middle East and the follow-up direction of European anti-dumping policy will be the three key variables that determine the direction of PTA market in the third quarter.