influence PTA Main factors of futures price

　　 （1） Supply

Due to the rapid development of China's polyester industry, the domestic PTA output is far from meeting its needs. The gap is made up by imports. In 2005, the domestic output was 5.89 million tons, the consumption was 12.14 million tons, of which the import volume was 6.49 million tons. The import dependency is 56%.

In order to meet the consumption demand of PTA in the domestic market, there are many new and expanded projects of PTA capacity in recent two years. As these projects are completed and put into operation, the domestic PTA capacity will be greatly improved, but there will still be some gaps relative to the growth of consumer demand. Compared with the polyester production line that can be put into production in one year, the PTA project needs at least one and a half to more than two years to be put into production. It is estimated that by the end of 2007, China's PTA capacity will reach about 12 million tons/year. However, it is certain that with the growth of domestic PTA supply capacity, the dependence on imports will gradually decrease.

PTA refers to continuous production and consumption. Production and consumption can be adjusted according to market conditions. At the same time, PTA spot transactions are dominated by direct sales. The upstream and downstream production and sales relationship is relatively stable, and the production and sales ratio is high. Therefore, the manufacturer has very little inventory. PTA is of high value and occupies much capital. Downstream polyester manufacturers generally only store consumption for more than 10 days. Traders and spot speculators usually have large inventories.

　　 （2） Demand

　　 1. Polyester growth determines direct demand

PTA is mainly used to produce polyester. 0.85-0.86 tons of PTA is required to produce 1 ton of PET. The development of polyester industry determines the consumption demand of PTA. In 1995, the global total polyester production capacity was about 19 million tons/year, while China's polyester production capacity was about 1.9 million tons/year, accounting for 10% of the global total production capacity; In 2005, the global production capacity was close to 55 million tons/year, while China's polyester production capacity reached 21.63 million tons/year, accounting for about 40% of the global total production capacity. The average annual growth rate of China's polyester production capacity reached three times the global average. In 2005, China's polyester production capacity reached 19.6 million tons. Calculated by the consumption coefficient of 0.865 and the operating rate of 70%, it can consume 12 million tons of PTA per year, which is basically consistent with the actual apparent consumption of PTA. It is predicted that after 2007, China's polyester production capacity will enter a cycle of slow growth, and the growth rate will remain around 5%.

　　 2. Textile growth determines terminal demand

Among polyester products, polyester has the largest demand for PTA, which determines the consumption of PTA. In 2005, the output of chemical fiber accounted for 61% of the total 26.9 million tons of fiber processing in China's textile industry, while polyester accounted for nearly 80% of the total. Polyester is the main raw material of textile industry. That is to say, the prosperity and development of the textile industry directly affect the polyester market consumption, and then determine the demand for PTA.

There is a close interaction between global GDP and global total fiber consumption. Strong economic growth has driven the demand for the end product clothing, which will provide greater development impetus for the textile industry. The development of textile industry promotes the growth of polyester demand and ultimately affects the market demand for PTA. According to the statistics released by the WTO, the global economy grew steadily at an average annual rate of 3.9% from 2000 to 2004, and the annual average growth rate of textile and clothing trade volume reached 6.5% in the same period. According to the International Monetary Fund (Weibo) (IMF) predicted that the global economic growth rate would remain at around 4.3% in 2005 and 2010. It is estimated that global fiber consumption and textile and clothing trade will continue to grow at a rate of 6.5% in the next five years.

China is the world's largest textile producer. Domestically, the national economy has been growing steadily for a long time. China has one fifth of the world's population. The clothing and household use of Chinese people account for more than 70% of the total amount of textiles and clothing produced in China. This shows that the development potential of China's textile industry lies in domestic demand, which is growing rapidly. This is the biggest driving force for the sustainable development of the textile industry, including the chemical fiber industry. At the same time, textiles are China's most competitive bulk export products, and China is the world's largest textile exporter. In addition to domestic demand, the development of the domestic textile industry is also affected by trade frictions and exchange rate changes in the international market.

In 2005, China's per capita fiber consumption increased from 7.5 kg in 2000 to 10.7 kg. The per capita growth rate of polyester fiber is higher than cotton And other fiber varieties. In the next three or four years, it is expected that China's chemical fiber industry will maintain a high growth rate of more than 10%, but the growth rate will gradually decline. It is estimated that after 2008, the growth rate will fall below 10%, and by 2010, the growth rate of chemical fiber capacity and output will fall back to 7% and 5% respectively; From 2010 to 2020, the average growth rate will continue to decline to 4% and 3%.

　　 （3） Oil price

The source of PTA is oil. In 2004-2005, when the supply and demand of the global PTA market were basically balanced, the price of PTA rose sharply. The reason is cost driven. Especially since 2004, the world oil price has risen all the way. Under the high oil price, the chemical market, as an intermediate product, is closely related to the price of crude oil and fluctuates simultaneously. The polyester and chemical fiber industry where PTA is located is no exception. The rise of oil brings about the cost transfer to the downstream, which directly causes the cost increase of PX, thus affecting the production cost of PTA. Data analysis also shows that PTA has a high price correlation with upstream oil and PX. Since 2001, the correlation between PTA and crude oil prices has averaged 0.78, and 0.76 in the first half of 2006. Therefore, investors should pay attention to the oil price when participating in PTA futures.

Correlation between PTA and crude oil price

　　 （4） Raw material price

PX is the most direct and main raw material for PTA production. More than 90% of PX in the world is used to produce PTA, which shows the close relationship between PTA and PX. In the spot market, the cost price reference formula of PTA is based on PX: PTA cost price=0.655 × PX price+1200. The price of 0.655 × PX is the cost of raw materials, and 1200 yuan is various production costs.

There is a high price correlation between PTA and PX. Since 2001, the average price correlation between PTA and PX has been 0.91, 0.94 in the first half of 2006. PTA price is largely restricted by raw material PX, especially when PTA price is quite close to the cost or even inverted, the raw material price force is very obvious.

In the last five years, the average growth rate of domestic PX consumption was 20.5%. In 2005, the domestic PTA consumed PX3.78 million tons in total, and the domestic production was only 2.23 million tons, with a self-sufficiency rate of 59%. Compared with the sharp expansion of PTA capacity, PX's expansion is relatively lagging behind. At the same time, the development of PX in the future will be affected by such factors as insufficient resources, increasing naphtha gap and the growth of gasoline demand for naphtha. Therefore, PX obviously restricts the development of PTA. With the completion and production of new PTA devices in China, the volume of imported PTA will decrease month by month, but the volume of imported PX will increase month by month. Price Correlation Diagram of PTA and PX The average annual growth rate of world PX production capacity from 2000 to 2005 was 4.4%. In 2005, the global production capacity was 25.9 million tons/year, and the demand was about 23.8 million tons. Asia and North America are the world's major PX production and demand regions, of which Asia's production capacity is 60% of the world's, and the demand is 68% of the world's. Hurricane and other disasters have a great impact on PX production. For example, the arrival of tropical hurricane Kerry in the United States will have an impact on the oil production in the United States and Mexico, because many refineries are located here. The refinery was also devastated by Hurricane Katarina in 2005. The above factors will lead to the rise of PX market.

（5） Price trend of cotton market

The downstream product of PTA is polyester, which is the raw material of textiles with cotton. The two are a substitute relationship. The price relationship between the two will affect their respective consumption in textile ingredients, thus affecting the demand for PTA. In the past two years, the low price of cotton has curbed the possibility of rising prices of chemical fiber products. From Table 6.6, we can find the substitution of cotton for chemical fiber. In 2004, the growth rate of pure cotton cloth production was 21.5%, slightly lower than that of pure cotton cloth 22.8%, and that of mixed fabric was 12.23%. By 2005, the growth rate of pure cotton cloth production continued to increase to 24.01%, while that of pure fiber cloth rapidly decreased to 12.22%, only half of that of pure cotton cloth, and that of mixed fabric also decreased to 9.34%. In the first quarter of 2006, this trend was more obvious. Although the growth rate of pure cotton cloth production was also declining, it was still 20.14%, much higher than 8.75% of pure fiber cloth and 9.43% of blended cloth; In the second quarter, the growth rate of pure cotton cloth continued to fall, while the growth rate of pure fiber cloth and blended cloth continued to increase, and the gap between the three further narrowed, respectively 17.13%, 14.66% and 11.78%.

Comparison of output growth rate of cotton, chemical fiber and blended fabrics

　　 （6） Equipment maintenance at home and abroad

PTA production device needs to be overhauled once a year. PTA manufacturers will choose slack season or months with bad market conditions to arrange equipment maintenance to reduce market risk, which will affect market supply.

（7） Change of RMB exchange rate

China is the largest textile producer and exporter in the world. The appreciation of the RMB will reduce the export competitiveness of textiles. In turn, the textile market situation will directly affect the development of chemical fiber industry and upstream PTA industry. On the other hand, the appreciation of the RMB means that the import PX price denominated in dollars is more attractive, which may cause the corresponding quotation to rise. In fact, after China implemented the exchange rate reform on July 21, 2005, overseas traders responded quickly and raised their quotations. Investors should pay attention to the various impacts of changes in the RMB exchange rate on the industry. （8） Before joining WTO, there were strict import barriers for PTA import. One is quota, the other is high tariff. After China's entry into WTO, the import quota of polyester products, including PTA, has been completely cancelled. The import tariff of PTA will be reduced year by year. In 2002, the tariff of PTA in China was 12.8%, and it was 11.8% from January 1, 2003 according to the tariff concession schedule. In 2005, the import tariff of polyester chain products: paraxylene (PX), purified terephthalic acid (PTA) and polyethylene terephthalate (PET) was reduced by 0.5% - 1%. The import tax rate of PTA was reduced by 0.5% to 6.5% on the basis of the tax rate in 2004, and the import tax rate of PET and PX was reduced by 1% to 9.7% and 2% respectively. This may reduce the import price of these three products by 5-10 dollars/ton. As the downstream chemical fiber industry is facing a serious shortage of raw materials, the continued implementation of the high tariff policy may restrict domestic polyester enterprises from the shortage of raw materials supply, inhibit the good development momentum of the domestic polyester industry, and thus affect the development of the chemical fiber industry. Therefore, the China Chemical Fiber Association suggests that the country take practical and effective measures to adjust import tariffs, adhere to the current policy of opening temporary tax rates and appropriately expand the scope, to a certain extent, solve the problem of tariff inversion between raw materials and fibers in the industry. Therefore, China may increase the pace of tariff reduction.

The reduction of tariff will increase the import pressure of PTA and affect the price trend of PTA. In fact, it is not true that the price of imported PTA is always based on the domestic market price minus the import cost of domestic enterprises. The reduction of tariffs is also likely to make foreign exporters correspondingly increase their quotations on the Chinese market, thus reducing the impact of tariff reduction on the domestic PTA market to a certain extent.