In the cost sector, recent crude oil prices have declined in tandem with a moderation in geopolitical tensions. However, the situation surrounding the US-Iran ceasefire agreement has recently seen renewed complications, leading to a rebound in crude oil prices.
Regarding PX, the PXN spread stood at $256 per ton two trading sessions ago, representing a decrease of $2 per ton from the previous period. Domestic refinery maintenance plans are gradually materializing, and current PX operating rates remain low. They are projected to drop to a multi-year historical low by mid-July. Market attention is on whether PX rates can recover as scheduled in late July. The recovery of overseas PX operating rates is also currently slow. With the Strait of Hormuz closed again, the timeline for supply restoration may be further delayed. In terms of inventory, PX stocks are at seasonally low levels and are currently in a destocking phase. If supply recovery is delayed, this destocking period could be prolonged.
For TA, the spot basis for PTA is 218 yuan per ton, up by 2 yuan per ton from the previous period. The spot processing spread for PTA is 518 yuan per ton, an increase of 85 yuan per ton. The processing spread for the main futures contract is 387 yuan per ton, down by 8 yuan per ton. PTA operating rates are currently still at low levels seen in recent years, and numerous maintenance plans remain scheduled for July. Significant inventory drawdowns are expected to continue through July, with current stocks already reduced to a medium level. In the short term, domestic operating rates are expected to remain low, but the absence of a supply shortage is limiting price gains.
On the demand side, polyester operating rates stand at 80.9%, up 0.8 percentage points from the previous period. Both polyester and weaving machine loads have rebounded. Renewed tensions between the US and Iran have sparked concerns about another potential rise in raw material prices, prompting downstream weaving operations to engage in concentrated low-level purchasing. For polyester, bottle chip operating rates are currently in a phase of recent increase, while major filament yarn producers are maintaining production cuts for the time being. The focus is on changes in raw material costs and the pace of demand recovery.
For PF, the spot production profit is -193 yuan per ton, an improvement of 10 yuan per ton. This week's price increases have triggered a round of restocking by downstream users, leading to a noticeable reduction in inventory. However, downstream orders have not yet materialized, and market focus remains on the sustainability of the rebound in raw material prices.
For PR, the spot processing spread for bottle chips is 616 yuan per ton, a decrease of 20 yuan per ton. Fundamentally, polyester bottle chip plant operating rates are increasing. Recent concentrated restarts of bottle chip plants, along with the scheduled startup of new units at Kesen and Fuhai Phase 2 in the latter half of July, are materializing, leading to a gradual increase in bottle chip supply. Processing margins are being compressed progressively, warranting close attention to raw material price movements.
Strategy
Single Positions: Consider cautiously buying PX/PTA/PF/PR on dips for hedging purposes.
Recent complications in the US-Iran ceasefire agreement and the renewed closure of the Strait of Hormuz suggest that PX supply recovery may fall short of expectations. Supply is still anticipated to tighten, reigniting market concerns about chemical product availability. It is advisable to cautiously consider buying on dips in the polyester industry chain for hedging, while monitoring geopolitical developments.
Cross-Commodity: None.
Intertemporal Spreads: Consider a PX/PTA September-January calendar spread (buying nearby, selling deferred) before the Strait of Hormuz reopens.
Risks
Significant fluctuations in crude oil and gasoline prices; macroeconomic policy changes exceeding expectations; geopolitical conflicts evolving beyond expectations.