The main reason for the accumulation of PTA inventory in 2023 is that 2023 is the peak year for PTA capacity expansion. Although downstream polyester has also expanded its capacity by tens of millions of tons, it is difficult to digest the increase in PTA supply. Among them, the growth rate of PTA social inventory will accelerate in the second half of 2023, mainly due to the commissioning of 5 million tons of new PTA production capacity from May to July. The overall PTA social inventory in the second half of the year will be at a high level in the same period in three years.
Peak year of capacity expansion, production reaches new high
In 2023, 12.5 million tons of new PTA production capacity will be added, combined with the 2.5 million tons of new PTA production capacity put into operation in late December 2022. The production capacity will increase significantly, driving PTA output to a record high. The annual PTA output in 2023 will be 63.057 million tons, a year-on-year increase of 18%, and the output growth rate has also reached a new high in recent years.
In terms of monthly output, PTA monthly output in 2023 will show a volatile upward trend. Among them, the low point during the year was in January. In January, due to the increase in production losses and the traditional demand off-season, PTA equipment reduced production and increased maintenance, resulting in low PTA output. The peak of monthly output during the year was in December. On the one hand, the PTA equipment production reduction was large in November, which promoted the rebound of PTA processing fees. On the other hand, 2.5 million tons of new PTA production capacity was put into production from November to December, and the new production capacity that was previously put into production was in December. The month is also running smoothly, and PTA monthly output is expected to hit a record high.
Downstream polyester capacity expansion hits record, demand grows 14% year-on-year
2023 is also the peak year for downstream polyester capacity expansion. The new polyester production capacity throughout the year exceeded 10 million tons. During the year, the monthly polyester output reached a record high five times, which significantly increased PTA consumption. It is estimated that PTA consumption in the polyester and non-polyester fields will total 57.97 million tons in 2023, a year-on-year increase of 14%, which will largely offset the pressure of increased PTA supply.
Looking at each month, the monthly low point of polyester production was in February and the high point was in December, which is close to the high and low time of monthly PTA production. Polyester production in February was at a low point. The main reason was that the Spring Festival holiday diluted the market conditions. The operating rate of terminal looms dropped to the freezing point during the year. Demand was negative from the bottom up. Polyester factories mainly reduced production. In addition, there were only 28 calendar days in February. , so polyester production in February was lower, even lower than the same period in 2022. The monthly output of polyester was at a high point in December. The main reason was that new polyester production capacity continued to be put into production, and the operating rate of terminal looms was higher than the same period in previous years. The overall polyester inventory was not high, and polyester factories maintained high operating loads.
It is estimated that PTA export volume will hit a record high in 2023. PTA export volume from January to November is 3.291 million tons, a year-on-year increase of 2.7%. The average monthly export volume of PTA from January to November was 299,000 tons. The export volume in December may be slightly lower than the average value from January to November. It is estimated that the PTA export volume in 2023 will be about 3.57 million tons, a year-on-year increase of 3.5%. The main reason for the record high PTA export volume is that there are too many old PTA devices abroad, and some old devices are unstable in operation. However, large-scale domestic PTA devices continue to be put into production, and integrated production capacity has enhanced the comprehensive competitiveness of PTA companies. The main reason for the slowdown in PTA export growth in 2023 is India’s BIS problem. India was once my country’s largest PTA export trading partner in the first half of the year, but in the second half of the year, the number of PTA exported to India fell off a cliff.
Polyester capacity expansion is expected to slow down and PTA accumulates inventory
It is estimated that demand growth will decline in 2024: polyester capacity expansion will hit a record in 2023, and the direct impact will be a decline in polyester product production profits or an expansion of production losses. With the expansion of the production capacity base, polyester companies may have to focus on the theoretical profit and loss expectations of polyester when putting new production capacity into production in 2024. A large amount of polyester production capacity will actually be put into production in 2023, some of which are projects postponed in 2022. Data from 2017 to 2022 show that the actual production capacity of polyester accounts for 50%-60% of the planned production capacity. It is planned to put into production about 9.37 million tons of polyester production capacity in 2024. Since the profits of some polyester products are worrying, it is estimated that the polyester production capacity will be put into production in 2024 between 4.67 and 5.62 million tons, which is significantly lower than that in 2023. The growth rate of PTA consumption will also be Significantly fell back. In addition, in the non-polyester field, there are not many capacity expansion plans in 2024, which cannot provide a large increase in PTA consumption.
It is estimated that the growth rate of PTA export volume in 2024 will be limited. Although the expansion of global PTA capacity has been concentrated in China in recent years, and the advantages of industrial chain integration have strengthened the competitiveness of PTA exports, due to the continued external resistance from abroad, the bargaining power of foreign buyers has increased. And currently, leading domestic PTA companies are actively expanding PTA overseas markets. In recent years, the “α” value in the US dollar price of exported PTA has continued to decline, which may inhibit the growth rate of China’s PTA exports in 2024.
It is estimated that PTA will be oversupplied in 2024: Although the new PTA production capacity planned to be put into production in 2024 is likely to be only 1.5 million tons of Ningbo Taihua and 3 million tons of Yizheng Chemical Fiber, due to the total increase of PT in 2023-2024A has a production capacity of 17 million tons. The actual supply increase brought by the new PTA production capacity of 12.5 million tons put into operation in 2023 will be completely released in 2024, so the actual supply pressure of PTA in 2024 will be greater. Due to the limited maintenance plans officially announced by PTA companies in 2024, it is expected that unplanned PTA device maintenance and production reductions will increase in 2024.
The opening of new ones and the suspension of old ones in 2024 may alleviate the pressure on PTA supply to a certain extent. Although the average annual PTA processing fee in 2023 is 337 yuan/ton, resulting in PTA companies mainly losing production, in order to maintain market share, PTA companies try to maintain normal production as much as possible. PTA will be difficult to repair due to low processing fees in 2024, and some PTA devices with high cost pressure may be shut down for a long time or run intermittently. The production capacity trend of the PTA industry is developing in the direction of technology-intensive and industrial upgrading. Large-scale new PTA equipment has been put into production intensively, which has lowered the average processing fee of China’s PTA industry and accelerated the elimination of backward production capacity. It is estimated that in 2024, the production capacity of some single sets of equipment will be in Devices with a capacity of less than 1.5 million tons will face the pressure of long shutdowns. The new and old ones will slow down the growth rate of PTA production. It is estimated that PTA production will increase by 6.6% to 67.25 million tons in 2024. It is estimated that the PTA surplus will be 1.25-1.55 million tons in 2024, and PTA social inventory will hit a new high.
To sum up, it is estimated that the growth rate of downstream consumption will slow down in 2024, PTA will be in excess supply, and PTA social inventory will reach a new high. At the same time, the PTA industry mainly opens new ones and stops old ones. The proportion of old PTA production capacity decreases and the proportion of new large-scale PTA equipment increases, which will enhance the overall competitiveness of China’s PTA industry.