The PTA futures main contract continued its strong performance on Monday, rising sharply alongside upstream raw material PX, both hitting new highs in nearly six months. Against the backdrop of weak international crude oil prices and pressure on most chemical products, the strong rally in PTA and PX has become a market focus, with structural tailwinds dominating short-term price trends. What lies ahead for PTA?
1. Strong Expectations and Mismatched Capacity Cycle The core driver of this PTA price surge is not immediate supply-demand improvements but rather strong market expectations for an optimized supply-demand balance in the polyester chain by 2026. From a capacity perspective, 2026 will see a "PX-PTA capacity mismatch." PX is expected to add around 5.5 million tons of new capacity (including projects like Yulong’s 3 million tons, Huajin’s 2 million tons, and Hainan Petrochemical’s expansion), but these are concentrated in late Q3 or even Q4 2026. Meanwhile, PTA will see no new capacity additions for the entire year. Downstream polyester output is projected to grow by 4.5% year-on-year. This means PX will face a scenario where demand growth outpaces supply expansion before H2 2026, creating a temporary supply gap. As PTA’s direct feedstock, PX’s tight supply expectations are bolstering PTA’s cost side, forming a favorable "strong feedstock + weak new capacity" dynamic.
2. Short-Term PTA Supply-Demand Support Holds, but Terminal Concerns Linger Despite strong long-term logic, PTA’s current fundamentals remain decent. Operating rates stand at around 74.1%, with some previously idled units set to restart, suggesting a slight supply increase. However, major suppliers’ maintenance will extend beyond the Lunar New Year, while polyester demand remains stable, with recent sales volumes rising and factory operating rates staying high. PTA inventories are still declining in December. Yet, terminal weaving demand shows weakness, with Jiangsu-Zhejiang fiber weaving operating rates dropping to 63% month-on-month as winter orders conclude. Due to the late Lunar New Year in 2026, spring orders are generally delayed. Amid bearish expectations, some firms may shut early, with the textile off-season deepening. Short-term market focus is on inventory control and stable shipments, reducing proactive restocking.
3. Valuations Partly Price in Long-Term Optimism; Caution Needed on Negative Feedback Risks Current PTA and PX valuations have partially priced in market optimism about the 2026 capacity mismatch and supply-demand improvements. On one hand, crude oil prices remain range-bound, lacking significant upward cost pressure. On the other, PX is supported by strong U.S. gasoline blending demand and Korean supply shifts to the Americas, tightening Asian spot supply and pushing PX prices higher. The PX-naphtha spread has rebounded to over $330/ton. Under this support, PTA processing margins, though long depressed since H2 2025, have seen slight recovery. This valuation rebound stems not from immediate fundamental improvements but from early pricing of future supply gaps and profit redistribution in the chain. In other words, current prices already factor in some medium-to-long-term positives. If downstream polyester cuts production or slows procurement due to high feedstock costs, the fragile balance could break, warranting caution in chasing rallies.
4. Outlook Looking ahead, PTA prices may maintain a strong but range-bound trend, with limited upside. The current strength is driven not by terminal demand recovery but by market anticipation of the 2026 PX-PTA capacity mismatch and supply-demand optimization. With no new PTA capacity and PX additions concentrated in H2 2026, expectations of tight PX supply in H1 are the core trading logic. Seasonal factors like ongoing post-holiday maintenance and pre-spring turnarounds add support. However, real-world concerns persist: weaving operating rates keep declining, winter orders are weak, and downstream players adopt low-inventory strategies. This "weak reality" highlights the polyester chain’s "off-season expectations" pattern, where markets focus on future supply-demand improvements during demand lulls. Amid the tug-of-war between strong expectations and weak reality, PTA faces resistance, with risks of downstream negative feedback.
Comments