PTA & MEG: Demand Moderates but Outlook Remains Stable

**PTA Summary** **Core View: Neutral** PTA inventories are expected to decline in December, with limited accumulation pressure in January-February due to prolonged shutdowns of some facilities. Seasonal demand has softened slightly, and costs have retreated significantly. Given a stable outlook, opportunities for buying on dips may emerge once crude oil stabilizes.

**Spread: Neutral** Near-term spreads remain moderate, while forward-month spreads show promise. Consider low-entry positive spreads for forward months.

**Spot Market: Cautiously Bullish** PTA spot trading activity is subdued, but spot basis remains firm. December offers are at 01-10, bids at 01-18, with negotiations around 4575–4590.

**Costs: Neutral** PX prices are stable near-term, with PXN valuations holding firm, reflecting market expectations.

**Facility Updates: Neutral** PTA maintenance remains elevated with no major changes. Facilities in YS Ningbo, Dahua, and Hainan are under maintenance, along with INEOS, Nengtou, and Dushan No. 1.

**Downstream Demand: Neutral** Textile demand has softened seasonally, but polyester operating rates remain high at 91.2%. Downstream processing rates: texturing (83%), weaving (67%), and dyeing (70%). Polyester operating rates for November-December are estimated at 91%.

**Supply-Demand Balance: Cautiously Bullish** Domestic PTA maintenance remains high, while polyester rates hold steady. December is expected to see inventory drawdowns, with limited seasonal accumulation pressure in January-February.

**Processing Margins: Neutral** PTA-Brent spreads are low, while PXN remains elevated at 280+ USD. PTA processing fees stay depressed.

**PX Summary** **Core View: Neutral** PX fundamentals remain favorable, with stable short-term supply-demand dynamics and elevated PXN valuations. Watch for buying opportunities on dips.

**Spread: Neutral** Spreads are steady with no significant supply-demand shifts.

**Spot Market: Neutral** PX spot prices have retreated. January floating prices are at -4/-3, February at +0/+1, and March projected at +1/+2.

**Facility Updates: Cautiously Weak** Domestic operating rates are high at 88%. Sinopec Shanghai has slightly reduced output, while Zhejiang Petrochemical plans maintenance in January.

**Imports: Neutral** Asian operating rates at 79.3%. Overseas updates: GS aromatics halted, Idemitsu restarted one line, and Saudi Satorp resumed operations.

**Downstream Demand: Neutral** Order momentum has softened slightly, with textile rates dipping seasonally. Polyester rates hold firm at 91.2%, with manageable inventory pressure.

**Supply-Demand Balance: Neutral** January-February should see balanced supply-demand, with limited pressure expected in H1 2026.

**Processing Margins: Cautiously Weak** PXN remains firm near 280+ USD.

**MEG Summary** **Core View: Neutral** MEG supply shows marginal improvement, with increased oil- and coal-based maintenance. December balance is improving, but accumulation pressure persists, keeping prices range-bound.

**Spread: Cautiously Bearish** Inventory accumulation is materializing, pressuring near-term spreads.

**Spot Market: Cautiously Bearish** Domestic MEG prices remain firm, but basis has weakened. Current spot basis is at 01-28/31, with negotiations at 3674–3677.

**Facility Updates: Cautiously Bullish** Domestic MEG maintenance has risen, lowering overall operating rates to 69.9% (coal-based at 72.17%). Facilities under maintenance include CNOOC Shell Phase 2, Fude, Sinochem Quanzhou, and Shenghong. Others like Zhenhai, Sinopec Wuhan, and Zhongke have cut output. New 200k-ton Ningxia Changyi facility is ramping up.

**Imports: Neutral** Overseas maintenance has increased, with plants in Taiwan, India, and Saudi Arabia undergoing work. November-December imports are estimated at 650k tons each.

**Downstream Demand: Neutral** Polyester rates at 91.2% provide support, but textile orders are softening seasonally.

**Supply-Demand Balance: Neutral** Supply improvements (domestic and imports) should balance December, but January-February may see slight accumulation.

**Processing Margins: Cautiously Bullish** Oil- and coal-based losses persist but have narrowed with cost declines.

**Terminal Demand Softens** Textile orders are tapering, with domestic demand winding down and overseas sampling yet to translate into bulk orders. Operating rates: texturing (83%, -2% WoW), weaving (67%, -2%), and dyeing (70%, -4%). Finished inventories are rising, and new orders are weakening. Pre-holiday restocking is expected by mid-January.

**Polyester Rates High, Margins Subdued** As of December 12, polyester operating rates stand at 91.2%, with average inventories at 16 days. Margins remain weak despite high utilization.

**Polyester Inventories Edge Up** Current polyester stocks are rising modestly, with POY, DTY, FDY, and staple fiber at 16.6, 27, 17.5, and 8.1 days, respectively.

**Polyester Operating Outlook** November-December rates are estimated at 91%. With manageable inventory pressure and a late Lunar New Year, high operating rates are likely to persist.

**PTA Maintenance Steady** Facilities in YS Ningbo, Dahua, and Hainan remain under maintenance, alongside INEOS, Nengtou, and Dushan No. 1.

**PTA Inventories Dip Slightly** As of December 11, social inventories (excluding credit warehouse receipts) fell to 2.15 million tons, with port stocks declining and warehouse receipts rising.

**PTA Balance Sheet** Near-term supply remains tight, with stable fundamentals supporting a buy-on-dips strategy.

**PX Outlook Stable** U.S. gasoline cracks have retreated amid rising inventories. Asian short-cycle margins have improved slightly.

**Aromatics Spread Narrows** U.S.-Asia spreads for toluene and xylene have tightened, with xylene tariffs exempted. South Korean aromatics exports to the U.S. rose in October-November, with further increases expected in December.

**Asian PX Rates High** Domestic operating rates at 88.1%, Asia at 79.3%. Sinopec Shanghai has cut output, while Zhejiang Petrochemical plans January maintenance.

**PX Balance Sheet** Fundamentals remain solid, with balanced supply-demand in January-February. PXN at 280 USD suggests limited downside.

**MEG Supply Tightens** Operating rates dipped to 69.93% (coal-based at 72%). New maintenance includes CNOOC Shell Phase 2, Fude, and Sinochem Quanzhou.

**MEG Margins Under Pressure** Losses persist for oil- and coal-based production, though cost declines have eased the pressure.

**Overseas MEG Maintenance Rises** Facilities in Taiwan, India, Saudi Arabia, and Canada are undergoing work, with December imports projected at 650k tons.

**Port Stocks Rise** East China MEG port inventories increased by 25k tons WoW to 844k tons as of December 17.

**MEG Balance Sheet** Supply improvements should stabilize December, but accumulation risks loom in January-February. Prices are expected to remain range-bound.

**Price Spreads** PTA basis remains firm, while MEG basis weakens. Forward-month spreads show stability.