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Research | Time:Nov 1 2017 2:40PM
PTA industry outlook in Q4 2017
 
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Preface
Effective PTA capacity reduced significantly after Xianglu’s PTA units were closed unexpectedly in 2015. PTA effective capacity totaled 36.28 million tons if Hanbang’s 700kt/year not included. PTA supply tightens apparently in 2015-2017, particularly in 2017 when polyester output grows quickly. Therefore, PTA inventory lowered evidently.

PTA prices jumped up quickly since end Jun supported by tightened supply and macroeconomic sentiment; Although inventory lower during Aug-Oct, PTA price increase was limited due to the expectation for restart of old units and new units in Q4. 


I. PTA industry in 2017: Periodical recovery 
  1. PTA supply-side reform
  2. Effective capacity of PTA is low
  3. Periodical de-capacity since end 2015
  4. PTA-PX spread expands with improving supply and demand structure
  5. O/R of PTA effective capacity lifts on enhanced supply/demand structure

II. Outlook in Q4 2017:
Bearish expectation VS bullish reality
  1. Bearish expectation: PTA capacity expansion
  2. Bearish expectation: concern over slipping macro economy and deviating commodity index
  3. Bearish expectation: PTA turnaround plan not intensive
  4. Bearish expectation: high polyester output may lead to heavy stock
  5. Bullish reality: High polyester profits
  6. Bullish reality: O/R of looms in Zhejiang and Jiangsu sustains high
  7. Bullish reality: Polyester production increment is large
  8. Bullish reality: Turning point of PTA supply and demand may delay to H2, Nov

III. Summary



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