Polyester Industry Chain

Polyester (PET), also known as polyethylene terephthalate, is a fiber forming polymer obtained from PTA and ethylene glycol through melt direct spinning polymerization. Producing 1 ton of polyester requires 0.855 tons of PTA and 0.335 tons of ethylene glycol. Among polyester, the production of polyester fibers is the highest, accounting for 75%, polyester bottle chips account for 20%, and polyester film accounts for 5%. Polyester fiber is used to make clothing and home textile fabrics, polyester bottle sheets are used to make beverage bottles, especially carbonated beverage packaging, and polyester film is used to make packaging materials, films, and tapes.

Ethylene glycol is an important basic organic raw material for petrochemical industry. The terminal raw materials of ethylene glycol in the world are crude oil, Shale gas, petroleum gas, coal and other energy commodities. There are two main production routes of ethylene glycol industry: ethylene method and coal based synthetic gas oxalate method, of which ethylene method accounts for the largest proportion of 64.66%, followed by coal based synthetic gas method, and ethylene production is subdivided into Naphtha production, ethane cracking production and methanol production. These two production routes involve raw materials such as raw oil, ethane, coal, etc., of which the production capacity of oil head ethylene glycol accounts for a large proportion, so the price of crude oil has a huge impact on ethylene glycol. In terms of import and export, ethylene glycol mainly relies on imports to support demand, accounting for approximately one-third of the total supply of ethylene glycol. The main importing countries are Saudi Arabia and Canada. In June 2022, the domestic dependence on ethylene glycol imports was 37.93%, with an import volume of 646400 tons. In terms of downstream demand, ethylene glycol downstream consumption is mainly concentrated in polyester filament, accounting for 50.44%, followed by polyester bottle chips, accounting for 17.8%, and polyester chips, accounting for 14.28%.

China is one of the largest producers of ethylene glycol in the world. The main production capacity of ethylene glycol is concentrated in East China, accounting for 53.14%. The provinces with the highest domestic output are Zhejiang, Jiangsu, Guangdong, Fujian, Shanghai, Tianjin, Henan, and Inner Mongolia. For a long time, ethylene glycol units have mainly been concentrated in two major groups, PetroChina and Sinopec, with Sinopec accounting for the largest proportion of production capacity, while the remaining units are distributed in ethylene process and coal production enterprises. In the first half of 2022, the total production of ethylene glycol was 6.8653 million tons, while in 2021, the production was 11.9079 million tons, both at a relatively high level in recent years. In 2021, the annual production capacity of ethylene glycol was 20.811 million tons, while in 2020, the annual production capacity was 15.681 million tons, an increase of 32.71% year-on-year. The growth rate of production capacity has decreased compared to 2020. The monthly production of coal to ethylene glycol in 2022 is at a relatively high level in recent years, with a maximum of 405600 tons per month. In 2021, the annual production of coal to ethylene glycol accounted for 26.57% of the total production, while in 2021, ethylene to ethylene glycol accounted for 64.66% of the total production.

Polyester raw material - PTA PTA is the end product of crude oil. The crude oil is processed to produce Naphtha, MX is extracted from Naphtha, PX (P-Xylene) is refined, and finally PX is made into PTA through catalytic oxidation process. PTA (catalytic oxidation process) cost composition=P-Xylene PX * 0.66+processing fee. The correlation between PTA and crude oil is 0.78, and the correlation between PTA and PX prices is 0.91. In terms of import and export, PTA mainly focuses on exports, but its proportion is relatively low, with an export dependency of 9.58%. In June, PTA exported 390000 tons; The import of its raw material PX accounts for a relatively large proportion, accounting for about one-third of the total supply. In terms of apparent consumption, China's PTA consumption increased from 15.29 million tons in 2008 to around 52.3 million tons in 2021, with an average annual consumption growth rate of 9.6%, exceeding the average GDP growth rate of the same period.

The concentration of PTA production capacity distribution in China is relatively high. PTA's production capacity is mainly concentrated in East China, accounting for 64.91%. From a regional distribution perspective, it is mainly distributed in Liaoning, Zhejiang, Jiangsu, and Fujian, with PTA production capacity accounting for 83% of the total production capacity in these four regions. From the perspective of enterprise distribution, Yisheng Petrochemical, Hengli Petrochemical (600346), Xinfengming (603225), and Fuhua Industry and Trade are the mainstream suppliers of PTA, accounting for 54% of the total production capacity. The annual production capacity of PTA in 2021 was 66.29 million tons, an increase of 16.11% compared to 2020; The annual PTA production in 2021 was 51.7 million tons, and in the first half of 2022, the production was in a fluctuating situation, totaling 29.81 million tons. The PTA production in 2022 was at a historical high level.

Polyester terminal demand situation

From the perspective of downstream products, the main products in China's polyester industry are polyester (filament, staple), accounting for over 65%. Polyester filament can be used to produce both civilian and industrial filaments, with civilian filaments accounting for the vast majority and being subdivided into polyester filament POY, polyester filament FDY, and polyester filament DTY, while the downstream products of staple fibers are spinning. From the perspective of demand, polyester is mainly used in the textile and clothing industry, accounting for 76%. In addition, polyester is used in food packaging, daily chemical packaging, and fresh cold chain packaging, accounting for 24%. From the perspective of production capacity distribution, the domestic polyester industry's production capacity is mainly distributed in the Jiangsu and Zhejiang regions. In 2021, the production capacity of the Jiangsu and Zhejiang regions was 51.3 million tons, accounting for 77.2% of the total polyester production capacity. The remaining production capacity is distributed in Fujian, Guangdong, and other places. In recent years, the domestic polyester production capacity has shown a gradual upward trend. In 2021, the polyester production capacity was 66.445 million tons, but the year-on-year growth rate has decreased.

The demand for terminal textiles and clothing has been suppressed by the epidemic, global economic downturn, and the peak inventory cycle, entering a medium to low growth state. The impact of high temperature power restrictions has led to a significant decrease in terminal construction in Jiangsu and Zhejiang, with downstream polyester load rebounding month on month, and orders still weak. Downstream polyester filament is in a high inventory state. From January to July 2022, due to raw material constraints and weak terminal demand, the overall supply and demand of the polyester industry chain were weak. Among them, the polyester industry was greatly constrained by the high cost pressure of upstream raw materials.