Price plummets PTA giants plan to limit production prices

With the plunge in the price of PTA (pure terephthalic acid), PTA production companies also turned from losses to losses before the industry was cold and bleak. To this end, several major PTA giants will reach an agreement to limit the current industry crisis in a way that limits production insured prices.

The reporter was informed that Zhejiang Yisheng, Sinopec Chemical Sales, Far East Petrochemical, Xianglu Petrochemical, Mitsubishi Chemical, Shenghong Chemical Fiber, Shanghai Zhongze and other PTA industry chain related companies will meet in Xiaoshan, Hangzhou today to discuss the new capacity expansion of PTA, PX (P-xylene) supply bottlenecks and downstream polyester growth, etc., and forecast the 2012 PTA market supply and demand and price trends.

According to the person in charge of a participating company, in fact, the meeting will also discuss the contents of restricted production and price protection. Because the current situation is severe, PTA has fallen below the cost, and market participants must respond.

Meng Hongjun, general manager of Jiangsu Hengli Chemical Fiber Sales Department, said that the fundamentals of the PTA industry have undergone major changes recently. The price of its upstream PX raw materials is still as high as 1,400 to 1,500 US dollars/ton, and the corresponding PTA production cost is 9300 yuan/ton, but on the market The price of PTA has dropped to around 8,000/ton, and PTA companies have turned losses from previous profits.

According to analysis, the PTA industry is currently suffering from two setbacks. On the one hand, there is no increase in supply of upstream PX projects to next year, but PTA has more than 2 million tons of incremental production capacity. This part of the production capacity lacks PX protection, and the bargaining power of upstream raw materials is gradually Loss; On the other hand, looking downstream, PTA companies often invest in polyester slicing factories. This year, the polyester production capacity will increase by 3.7 million tons, and the increase will be more than 7 million tons in the next year, which has already formed a surplus, and the demand for textile and apparel in the terminal is weak. As a result, a large number of losses in the polyester industry have been forced to reduce the operating rate, and PTA's downstream pricing has not been accepted by the market. "If you do not cut production, you really don't know what to do," said Meng Hongjun.

In fact, domestic PTA factories have begun to publish some production stop plans in succession, but they are mostly carried out in the name of “overhaul”. For example, Zhuhai BP's 900,000-tonne PTA plant is scheduled to be scheduled for maintenance in December; Shanghai Jinshan 400,000-tonne plant is still in the parking; Pengwei Petrochemical's 900,000-tonne plant is scheduled to be overhauled in mid-December. Several other listed companies are also scheduled for November to December. The discontinued operations of these companies are basically on their own, and PTA prices are still low.

Therefore, the Xiaoshan meeting has attracted much attention from the market. The key point is whether several major giants will reach an agreement on joint production cuts and try to pull PTA into turmoil.

The main purpose of the industry analysis is twofold: The first is to raise the settlement price. The chemical industry generally adopts a reporting and pricing mechanism. For example, the PTA plant quoted a price of 10,000 yuan per ton for the polyester factory in November, a reference market price of 8,000 yuan per ton for settlement, and an inter-annual balance of 2,000 yuan per ton for refund. The settlement price will be increased in late November to reduce short-term losses; the second is to release signals to customers to reduce supply. The industry adopts a "quantitative non-pricing" approach to long-term business transactions. However, with the current sluggish market, polyester plants have been reluctant to purchase orders for 2012, and PTA giants hope to promote joint-venture contracts to sign contracts for next year.

In response, Wu Wenhai, an analyst with Soochow, said: "The industry is highly concentrated. If three or four companies can determine the limited production price, I believe there will still be results."

According to the person in charge of the above-mentioned participating companies, the price of PTA fell so much, mainly because the macro economy was not good, and ** brought the spot down. However, after several companies cut production together, the supporting role of cost will be significantly enhanced.

Meng Hongjun believes that if these companies really have positive measures, the market may still go up in the short term. After all, PTA was profitable and had capital strength. However, in the medium and long term, the contradiction between supply and demand imbalances in the entire industry chain will continue to be plagued.

In addition, some people compared the PTA's joint production cutbacks to 2008, when Asia’s No. 1 Hualian Sanxin bucked the trend and bankrupted. However, according to different opinions, this time it is a unified production cut by several major companies, and the nature of Hualian Sanxin’s unilateral attempts to pull through the stock market is completely different.