Market Analysis

On the cost side, recent market focus remains on the situation in Iran, with crude oil prices fluctuating in response to geopolitical developments.

For PX, the PXN spread was $258 per ton two trading days ago (a decrease of $1.00 per ton compared to the previous period). Chinese PX operating rates have recently stabilized. While traffic volume through the Strait of Hormuz has increased month-on-month, overall levels remain low, with Asian operating rates falling to multi-year lows. However, due to a concentrated decline in PTA operating rates, the pace of PX inventory drawdown has slowed, and spot floating price negotiations have retreated noticeably. Support exists at seasonal low inventory levels. If the Strait of Hormuz passage issue persists unresolved, the PX supply gap will remain significant.

Regarding PTA, the spot basis differential was 122 yuan per ton (an increase of 21 yuan per ton compared to the previous period). Spot processing margins for PTA were 483 yuan per ton (an increase of 35 yuan per ton), while the main futures contract's processing margin was 396 yuan per ton (an increase of 6 yuan per ton). PTA operating rates are expected to remain low in the near term. Current warehouse receipt and social inventory levels remain relatively high. However, as PX buffer inventories are consumed and PTA operating rates fall to low levels, a significant inventory drawdown is anticipated for May. Continued attention is warranted on polyester production cuts.

On the demand side, the polyester operating rate stands at 81.5% (down 0.3% from the previous period). Polyester operating rates saw a slight decline this week, while weaving and texturing loads experienced a minor rebound. Overall order intake remains weak. Additionally, substitution effects are emerging under high prices, with end-users primarily focused on digesting raw material inventories, leading to limited follow-up procurement. Current inventories of finished woven goods and raw materials are not high, but downstream sectors are minimizing operations to control the pace of inventory accumulation. Polyester operating rates are expected to hold steady in the short term, but inventory pressure remains elevated. Monitoring changes in weaving machine loads and orders is advised, as negative demand feedback persists.

For PF, spot production profits were 55 yuan per ton (a decrease of 36 yuan per ton). Direct-spun polyester staple fiber prices adjusted in line with raw materials. Due to weak processing margins, producers coordinated to reduce output, leading to a decline in staple fiber operating rates. On the demand side, pure polyester yarn prices consolidated with average sales, rising inventories, and a slight decrease in operating rates. Polyester-cotton yarn sales were average, with prices rising, inventories stable, and operating rates increasing marginally. Overall, support from producer output cuts and reduced trader holdings has alleviated some oversupply pressure in the staple fiber market. However, weak demand and substitution effects under high prices persist. Future attention should be on raw material price movements, as operating rates still show a tendency to decline further.

Regarding PR, bottle chip spot processing margins were 1,489 yuan per ton (a decrease of 52 yuan per ton). Fundamentally, polyester bottle chip plant operating rates remain stable. A new 200,000-ton unit by Tiansheng is scheduled to produce bottle chips by the end of the month. Polyester bottle chip producers maintain firm pricing, with a preference for export orders. Market supply remains tight, and export performance is relatively good. Factory inventories are maintained at low levels, supporting high processing margins.

Strategy

Single Positions: Neutral on PX/PTA/PF/PR. While differences remain in the U.S.-Iran stance and some terms, overall progress is being made towards an agreement. Continued focus on negotiation details and the Strait of Hormuz passage situation is warranted. Current traffic volume remains low, but there are marginal signs of easing. The recovery of supply in the polyester chain still requires time, but expectations of a marginal supply increase are weighing on market sentiment. Concurrently, downstream sectors are in a seasonal lull, suggesting short-term prices are likely to remain under pressure. However, market information is fluid; monitor changes in costs and demand.

Cross-Commodity: None Inter-Temporal: None

Risks

Significant volatility in crude oil and gasoline prices; macroeconomic policies exceeding expectations; geopolitical conflicts evolving beyond expectations.