This week, the domestic PX market price trend has declined, with an average price of 10500 yuan/ton at the beginning of the week and 10500 yuan/ton over the weekend, a decrease of 6.67% and a year-on-year increase of 46.27%.
Cost side: Geopolitical premium fades, crude oil support collapses
This is the most direct driving force behind this round of decline. Previously, the market injected a high risk premium into crude oil due to geopolitical risks such as the US Iran conflict. Recently, with signals of easing in geopolitical relations, this premium has been rapidly squeezed out, leading to a significant pullback in international oil prices. Data shows that crude oil futures have experienced a wide decline for three consecutive trading days, with a cumulative drop of nearly 20%. As a downstream product of crude oil, the cost center of PX has shifted upwards, and the previously cost driven upward trend has entered an adjustment phase. The market generally believes that cost is the core logic that currently dominates the PX market trend, and the weakening of crude oil directly drives the overall decline of the PX, PTA, and polyester industry chains.
Supply side: Although PX supply has contracted, it has not been able to reverse the trend
Although the domestic PX plant load has recently fallen from over 80% to 79.4%, the marginal reduction on the supply side has not offset the dual negative effects of cost and demand. The continuous decline in spot prices against the backdrop of supply contraction indicates that cost pressures are absolutely dominant.
Demand side: Terminal weakness leads to negative feedback
As the final link in the polyester industry chain, the terminal weaving operating rate continues to be low. As of early November, the operating rate of weaving machines in Jiangsu and Zhejiang provinces was only around 52%, with a comprehensive operating rate of about 61% for reloading. Polyester production and sales continue to be sluggish, with an average estimated level of only 20-30%. Insufficient terminal orders have led to a decrease in the willingness of polyester factories to purchase raw material PTA, which in turn has dragged down the demand for PX. The institution clearly pointed out that “insufficient terminal demand and negative feedback to PX” are important reasons for the price reduction.
Market forecast: In the short term, the decline in PX is the result of the combination of “cost collapse” and “negative demand feedback”. The disappearance of geopolitical risk premium has loosened the core cost support of crude oil, while the sustained downturn in terminal textile demand has blocked the upward space for prices. It is expected that the PX market will mainly fluctuate.
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