Tight Supply To Promote PTA Trading &Nbsp; Market Outlook Concerns Positive Arbitrage Opportunities

On Thursday, Zhengzhou PTA futures increased trading volume, up to the end of the year, except for February and April contracts, all closed trading boards, the main contract in May increased 65 thousand and 700 positions.

The acceleration of PTA after a short adjustment is closely related to the gradual increase in production costs.

Before 2009, domestic PTA production was highly dependent on imported PX raw materials, and the degree of dependence on PX imports basically remained above 40%. PTA production enterprises, though dominant in bargaining with downstream polyester enterprises, did not have a dominant position in the bargaining of upstream PX producers when purchasing key raw materials PX.

After the large-scale expansion of domestic PX capacity last year, the dependence on foreign trade dropped sharply. The price of imported PX continued to decline in the first half of this year, and the international PX production enterprises were once in a state of deficit.

After entering the autumn peak of textile and clothing production, the tight supply of cotton has led to a rapid rise in market demand for chemical fiber. The demand for polyester products is in short supply. The market demand for PTA continues to rise. PX as the main raw material for production of PTA is tight and prices are rising steadily. The price of Asian PX has risen from 830 US dollars per ton in mid July to 1260 US dollars per ton, or more than 50%.

The sharp rise in the price of PX has made the domestic PTA production cost rise rapidly, thus driving the price of PTA to go up steadily.

The crude oil price trend at the top of the PTA industry chain is also an important factor affecting the price trend of PTA.

The second round of quantitative easing monetary policy of the US Federal Reserve will not only keep interest rates unchanged, but also buy US $600 billion of US Treasury bonds in the next 8 months, with an average purchase of US $75 billion a month.

This means that the full supply of US dollars in the next six months will continue to raise the price of US dollar denominated commodities. The international crude oil prices are accelerating upward trend, which will continue to increase the production costs of downstream PTA and other products.

Although the domestic monetary policy is tight, the rise of PTA is suppressed, but the impact of rising crude oil prices is still dominant.

Once the price of crude oil stands at a price of 90 US dollars per barrel, the probability that PTA price will run above 10000 yuan will increase greatly.

Polyester substitution effect strengthening

Not only will the increase in production cost push the focus of PTA trading, but the substitution effect of polyester on cotton yarn will also make the supply of PTA market tight.

Last week, the author inspected the PTA industry chain and found that the equipment of polyester filament production workshop was running at full load. Some polyester staple fiber production lines which had been shut down due to losses have been restarted.

Although the peak of consumption has passed, the price of polyester filament has steadily increased recently, and the price of PET staple has risen to 13300 yuan / ton from 9600 yuan / ton before the double festival.

The expansion of polyester production capacity exceeds PTA, making PTA oversupply situation completely reversed in the second half of the year. The contract goods of PTA production enterprises can not meet the market demand, and the procurement of polyester enterprises in the spot market has increased. The tight supply of goods has made the spot price of PTA rapidly soar to 9000 yuan / ton, thus driving the price of the futures market to rise sharply.

Futures market or current arbitrage space

From the futures market, the PTA main force shifted from 1101 contract to 1105 contract early, reflecting the optimism of the market. At present, the peak of textile and apparel production is coming to an end. It is coming to the test of the terminal consumer market. If the consumption situation is not as expected as the market, the price of PTA will be difficult to sustain. When the 1101 contract expires, it is in the low consumption season, and the price increase is limited in the later period. The higher the probability of the 1105 contract being driven by the rising cost, the higher the price difference.