Wang Guangqian, director of Research at Hengyi Petrochemical, delivers his report of

Analysis and prospects of the PTA Industry.

Mr. Wang delivers the report in the following three parts.

In the first part, Mr. Wang analyzed the operating characteristic of the PTA Industry. He believes that the PTA industry chain exhibits a long whip structure with a low investment intensity per ton and strong sensitivity to raw materials and price trends. Since 2022, the price adjustment of aromatic oil with PX as raw materials has become the core driving force behind the polyester market. Additionally, the concentration in the PTA industry market has been intensified, and integration competition becomes more obvious.

In the second part, Mr. Wang analyzed the supply and demand situation in the PTA Industry Chain. He notes that the newly added PX capacity will temporarily alleviate supply constraints after it is put into operation, and the aromatic oil adjustment will determine prices. As PTA enters a new phase of capacity expansion, raw material constraints and low processing fees restrict supply elasticity, resulting in a short supply-demand balance. In terms of demand, the end of the epidemic and the recovery of real estate completion provide space for the recovery of textile and apparel demand. Downstream polyester is in the middle to later stages of the production cycle, with low inventory and cash flow pressure and strong operating rate resilience in the short run. The demand outlook is cautiously optimistic.

In the third part, Mr. Wang expressed his outlook for the supply and demand of the PTA Industry. He expressed that on an annual basis, with the tight supply of oil with PX as raw material, medium to low processing fees for PTA will become the norm. Looking at longer cycles, PTA is still in an expansion phase, and the urgency of acquiring feedstock PX resources will increase. Polyester and the end-user market is supported by domestic and international demand, and so the outlook is optimistic.