Industry Chain Game: Private PTA Enterprises Limited Production Insurance Price Survey

Rongsheng Petrochemical is one of the largest private petrochemical giant enterprises, and with Hengyi Petrochemical Co founded in Zhejiang, China's largest PTA (terephthalic acid, one of the major bulk organic materials, widely used in chemical fiber, light industry, electronics, construction and other aspects) Yisheng group, PTA total capacity of 13 million 600 thousand tons.

"Giants are also tight money."

A multinational investment bank analyst admitted to the twenty-first Century economic report reporter: "since May, Yisheng, Hengli and Xiang Lu three private PTA giants jointly limited production and insurance prices, PTA prices have soared, but the relevant enterprises have also suffered enormous financial pressure, Yisheng bonds are inevitable."

Starting in May this year, the PTA futures price started from 5990 yuan / ton and began to rise rapidly. After two rounds of ups and downs, it reached a new high of 7508 yuan / ton by the end of July, which rose more than 25.3%. Even in the spot market, the increase of PTA was also amazing. In early May, the price of PTA was 6100-6110 yuan / ton, and the price reached 7630-7650 yuan / ton at the end of June.

And behind this is Yisheng petrochemical, Hengli petrochemical and Xiang Lu Petrochemical three maintenance for up to two months, less than 60% of the low opening rate.

It is understood that since 2011, the PTA industry of textile raw materials has entered a downward cycle. The price of PTA has fallen from less than 6000 yuan / ton from 12000 yuan / ton at that time, and Yisheng, Hengli and Xiang Lu, which occupy 70% of the country's capacity, have to remain in a small profit or even a loss for a long time.

"They have pressure on overseas PX suppliers to raise prices, and the textile consumption has been underplayed."

Starting in May this year, 8 private enterprises headed by the three above-mentioned companies

The manufacturer decided to control the operating rate below 60%, limit production and protect prices. "In order to ensure the consistency of the actions of the 8 enterprises, they also specially hired an international accounting firm to collect deposits from all participants," an insider told reporters.

"This will not only enhance the bargaining power of PX producers, but also complete the integration of the industrial chain as soon as possible, so as to enhance the international competitiveness of enterprises and ultimately increase the pricing power of the Far East textile products."

He said.

However,

The cost is enormous: the limited production makes the operating rate of enterprises unable to guarantee, and the cost of manpower, equipment depreciation, inventory pressure and so on are eroding three cash capabilities. The fluctuation of upstream PX prices and the payment mode of payment to delivery make them more stressed.

As a result, the issuance of Rongsheng Petrochemical is unavoidable. According to the approval of the SFC, Rongsheng Petrochemical has obtained a total amount of 2 billion yuan of corporate bonds, and the 1 billion yuan issue is only part of it.

For these private enterprises to limit production and insurance prices, Sinopec, PetroChina and other oil central enterprises sit idly by the game between private enterprises and pnational capital, but they do not agree with this practice.

"They are gambling, and the overseas PX installations that have been put into operation in the near future will force the price of PX to be substantially reduced, thereby improving the profit margins of PTA producers and gaining the influence of global textile pricing power."

There are Sinopec executives to the twenty-first Century economic report, said: "but in the medium to long term, Yisheng and so on this strategy is very difficult to achieve results, because the domestic PX - PTA polyester polyester fiber chemical industry chain has many problems, simple PTA pricing power is not enough to improve the status of the entire industry chain, let alone compete for PTA pricing power may not be able to succeed.

In August 24th, Fu Chengyu, chairman of Sinopec, admitted that China's chemical market is a value depression in the world, and demand is also growing. However, with the release of the capacity of privatization industry, the growth of suppliers will be faster, so the price will continue to fall, and the downward trend is not temporary.

We need to make strategic adjustments.

Since late August, the price of PTA futures has fallen sharply, and it has fallen to nearly 6704 yuan / ton in September 1st, or nearly 800 yuan / ton. However, it is not destructive to the three largest private enterprises, because PX price is also falling. From the peak of 1500 US dollars / ton to 1300 US dollars / ton, the profit of PTA enterprises is bigger.