Polyester industry chain during the May Day holiday

During the May Day holiday, EIA data showed a significant increase in US crude oil production in February, and US crude oil inventories unexpectedly surged last week. The possibility of the Federal Reserve delaying interest rate cuts, slight easing of geopolitical tensions in the Middle East, and global demand slowdown have all led to a sharp decline in oil prices. WTI fell by 4.7%, Brent fell by 4%, dropping from $81.93 and $86.33 on April 30th to $78.11 and $82.96 per barrel on May 3rd.

Due to the decline in oil prices, naphtha also fell, dropping by 4.5% from $712.75 on April 30th to $680.88 per ton CFR. During the same period, MX and PX also fell, but both saw decreases in downstream and upstream raw materials. MX fell from $989.5 to $974 per ton FOB South Korea, with a decrease of only 1.6%. PX fell by 1.3%, from $1038 to $1024 per ton CFR China.

PX

In term of economics, PX-MX price spread remained low, recording only $28/mt on FOB Korea basis on May 3 and hitting low point of $19/mt on May 2, new low since mid-Nov 2022. Some PX units based on merchant MX outside China were challenged by poor economics. And thus any production cuts should be watched closely. However, PX-naphtha price spread was acceptable, hovering around $340/mt on CFR basis. TDP margin was also positive, with spread at around $190/mt, which would be supportive to PX plant operating rate.

During the holiday, PX plant operating rate was largely stable. In the week beginning from May 6, SK's 400kt/yr line and Weilian Chemical's two lines with combined capacity of 2 mln mt/yr would undergo scheduled maintenance.

PTA

Some PTA plants adjusted the operating rate during the holidays. FCFC lifted the operating rate of the 1.5 million-ton PTA plant to 80%, while Yisheng increased the operating rate of the 3 million-ton PTA plant to over 90%. Some plants were undergoing planned maintenance, with Jiaxing Petrochemical's 2.2 million-ton PTA plant currently undergoing maintenance and expected to resume operations in about 2 weeks. Additionally, Hengli Petrochemical's Phase 1, Honggang Petrochemical, and Weilin Chemical's PTA plants are expected to undergo maintenance soon. PTA plant operating rate in Chinese mainland is expected to drop to 73%. Furthermore, due to boiler renovations, some polyester factories in Xiaoshan have recently shut down. Yisheng New Materials' 3.6 million-ton PTA plant may undergo early maintenance, and attention should be paid to the implementation of these maintenance plans.

MEG

Xinjiang Zhongkun has restarted its 600kt/year syngas-based MEG unit during the holiday. The unit was shut in late April.

Polyester

PET bottle chip and PSF prices were stable. PFY price edged up during the holiday, after sales surge in end-Apr, but sales were lackluster during the holiday. Some mainstream PFY plant lowered offers by 300yuan/mt on May 1, but the discounts available during the negotiations were reduced, and thus the actual trading price was up by 50-100yuan/mt. The prices were largely stable during May 2-4, while some producer cut DTY price by 50-100yuan/mt on May 5.

Sales of PFY were lukewarm during Labors' Day holiday in Zhejiang and Jiangsu. The average sales ratio was assessed to around 30% during May 1 to May 5. Sales of DTY were relatively goods from some plants. The sales ratios of major plants were at 30%, 45%, 80%, 20%, 10%, 30%, 30%, 70%, 80%, 85%, 87%, 10%, 35%, 60%, 70%, 20%, 10%, 30%, while some plant ceased selling.

Polyester plant operating rate fluctuated during the holiday. One big plant in Xiaoshan with PFY capacity of 1 mln m/yr shut due to revamp of boiler, and the restart date was undecided. Another 600kt/yr plant also planned to shut on May 6 due to boiler revamp. In addition, some 600kt/yr PET bottle chip plant had begun cutting production in May, and another 650kt/yr plant was scheduled to start maintenance from end-May. Polyester plant operating rate is estimated to decrease in May.

Textile mills

The holiday for downstream textile plants was short, and some plants suspended production for only 1 or 2 days. In the latter half of the holiday, downstream textile operating rate recovered to the high level seen prior to the holiday. After the intensive buying in end-Apr, downstream textile plants mainly consumed from stocks during the holiday.