Through out the first half of 2011, PTA drop amount is more than 30%, which ranks the first of the futures commodity price. Recently, commodity showed the sign of rebound, PTA futures price also seems to rebound up. Combining the macro environment, PTA industry chain supply and demand, and also the technical aspects, in my opinion, PTA price is likely to rebound up at B weave and drop at C weave. Sell up at the highest price will still be the main operation strategy?
Inflation changes lead to monetary tightening policy change
Currently, the inflation is expected to reach its peak in June or July. First of all, China’s economic growth speed slowed down, which lead to inflation speed slowing down. Then, the traditional point of view believe that inflation is a kind of monetary phenomenon, while the continual monetary tightening policy has already dropped capital supply and credit growth rate down. To my humble opinion, proactive fiscal policy will go on, especially towards protection housing construction, water conservancy construction and some other livelihood projects, which also provide a soft landing for the macro economic conditions. Prudent monetary policy will not be easily changed in the year, but tightening monetary policy is expected to decrease.
Release Strategic Reserve to curb oil price up
23rd June, IEA claimed that the country will release 60000 thousand barrel crude oil reserve in the future 30 days to cover the shortage resulted from Libya war. For the release this time is out of expectation while it is reasonable. Why it is reasonable? Because as the 7th OPEC oil country, Libya is impaired from the war. Even for the June OPEC meeting has not reached the agreement on increase production. In order to balance oil supply and demand, it becomes reasonable to release the reserve. Why it is still out of expectation? Comparing with the previous reserve oil releasing, it seems not a good time to release the reserve again. Recently, American futures price frequently raise transaction deposit, and ministry of agriculture bad news report of a series of agriculture products can be the evidence.
PTA Excessive Profit Era Will Finally Go to the End
Global PX production growth rate will slow down after the year 2011. PX demand increased dramatically, PX equipment operation rate gradually recovered, supply and demand is generally kept at balance. With the global economic growth rate slow down, and bulk good price fall back since 2010, especially for the starting up of Asian PX equipment, and without PTA new equipment starting up, PX price slumped in the first half of 2011. The gross profit has fell back to $150/t, closing the average level before the price went up last year. For the rapid expansion of PTA production in the second half of 2011, PX supply tend to tighten up, and PX price is expected to go up.
Influenced by the production release in the second half of year, especially under the circumstance of limited expansion ability, PTA excessive profit era is possibly to end, and the production will expand dramatically in 2012-2013. In the second half of 2011, PX price further downward room is not big, which is expected to stop down at the level of Nov last year, about at the price of $1300 or so. Estimated from which, PTA production cost is about at 7750CNY or so, and according to the average profit distribution, PTA spot price should at 8250-8750CNY or so. Now PTA spot price has closed to that range, therefore the cost support will gradually to emerge.
Sell up at the highest price will still be the main operation strategy in the second half of year.
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