“negative processing fee” first appeared, and the pressure of enterprises increased sharply
since 3, with the high fluctuation of crude oil price, the production cost of China Petroleum & Chemical Corporation(600028) industry has increased sharply, the whole olefin and aromatic hydrocarbon industry chain has been greatly affected, and industrial enterprises generally suffer from processing fee losses. The reporter of futures daily learned that on March 8, PTA appeared “negative processing fee” for the first time in the aromatic industry, and the theoretical loss of the enterprise was as high as 4000 yuan / ton. After the crude oil price adjustment last week, although the existing PTA processing fee has returned to about 300 yuan / ton, it is still relatively poor. At the same time, the first oil-based PP and PE also suffered large losses, and the theoretical loss of oil-based olefins once reached 2000 yuan / ton. The further deterioration of industrial chain profits has led many petrochemical enterprises to embark on the road of “self-help”. At present, the market has ushered in the tide of maintenance and negative reduction. While using market-oriented means, many enterprises actively take advantage of the futures and derivatives market, and the methods of hedging and locking processing fees have become a sharp tool for enterprises to manage the risk of processing fees
petrochemical industry processing fee severely squeezed
At present, the upstream and downstream of China’s aromatics and olefins market are obviously separated under the high price and high wave of international crude oil, and the high profit of naphtha has greatly squeezed the processing cost of downstream finished products.
The reporter of futures daily learned that taking PX as an example, the current price difference of PX naphtha is maintained at 110230 US dollars / ton, which is lower than the production cost of many PX devices. High oil prices and high fluctuations have had a great impact on the aromatics and olefin industries.
“Recently, the price of crude oil has increased greatly, but affected by the contradiction between supply and demand of each variety, the increase of downstream chemicals is obviously lower than that of crude oil, which has greatly compressed the profits of various chemicals including PP, PE, PTA and MEG.” Everbright futures analyst Zhou Ao said.
In the face of the rise in the price of auxiliary materials, PTA processing fees have entered the loss range. “On March 9, 2022, the processing fee of PTA was – 96 yuan / ton; the production of 1 ton of PTA was not only for nothing, but also pasted 96 yuan / ton into it. After witnessing the negative oil price, we witnessed history again.” Zhang Hao (a pseudonym), a senior person in the polyester industry chain, sighed in the circle of friends.
“At present, there are different degrees of losses in terminal, polyester and PTA factories, and losses have become a common phenomenon in the industrial chain.” Liu Siqi, an analyst at Tianfeng futures, said that under the high cost, aromatics industry chain enterprises may face the double blow of rising costs and negative demand feedback. Although crude oil fell sharply last week and the cost side fell, the industry is still facing the risk of depreciation of raw material inventory. “For enterprises in the industrial chain, before the bottleneck of oil price supply is solved, the pressure of high cost continues, and the production profit of enterprises may remain low.”
“From the perspective of China, the loss of oil-based products in the olefin industry chain has also been a common phenomenon. There are large losses in oil-based PP and PE, and the theoretical loss of oil-based olefins once reached 2200 yuan / ton.” Ouyang fan, the relevant person in charge of the production and Research Department of Wuchan Zhongda Group Co.Ltd(600704) chemical group, also told the reporter of futures daily that from the perspective of production capacity cycle, polyolefin is still in the production stage, and in the first quarter of each year, it faces seasonal high inventory contradiction, which is not conducive to the expansion of industrial chain profits.
During the interview, the reporter learned that at present, large petrochemical enterprises dominated by refining and chemical integrated units can still maintain the continuity of production and operation through the profits of naphtha and gasoline and diesel. For production enterprises dominated by single units, they should not only face the environment of poor naphtha procurement and transportation, but also face the situation that the continuity of operation and production profits are eroded by the upstream.
In fact, the sharp rise in oil prices also has different effects on different olefin industry chain enterprises. “From the perspective of refining and chemical integration enterprises, since olefins are mainly supporting devices, not the main products of the enterprise, and the revenue of olefin business generally accounts for only about 10% of the overall revenue of the enterprise, olefin losses have less impact on the operation of the enterprise, and the operation of the enterprise is more affected by the processing fees of main products such as refined oil.” Zhou Ao said that for some single units, the sharp fluctuation of oil price had a great impact on the operation of enterprises. For example, in PDH, due to the significant reduction of processing costs, some enterprises choose to overhaul or reduce the load of some devices, and some enterprises even choose to extract propylene.
The high fluctuation of cost side also damages the interests of downstream enterprises. Ye Chen, deputy general manager of PVC business department of Hangzhou Zhongjing Industrial Co., Ltd. of Jiayue products group, said that at present, the downstream polyolefin plants are still in the process of seasonal recovery of demand, the finished products are difficult to rise, and the new orders are weak. Facing the rapid rise of raw material prices, it is unable to effectively lock in the order cost, and some industries are also in a loss dilemma. “For small enterprises producing products downstream, the sharp rise in raw material prices has put forward higher risk control requirements for the steady operation of small enterprises against the background of declining orders.”
industry losses force enterprises to lift the tide of maintenance
In the face of sustained serious losses, enterprises generally take actions such as reducing production burden, early maintenance and unplanned parking to rebalance supply and demand through supply reduction in order to repair profits.
The reporter learned that at present, the upstream production enterprises of olefin and aromatics industrial chain are facing the pressure of production loss. At present, the petrochemical enterprises of oil and chemical industry have partially reduced the load due to production loss, and the polyester factories have also reported the news of reducing the load due to processing fee loss.
“With the decline of crude oil price, although PTA’s production profit has been repaired, the processing fee of about 300 yuan / ton still can not maintain the normal operation of PTA production enterprises. In order to deal with the large-scale loss of the industry, PTA factory plans to carry out large-scale maintenance from March to may, but the effect of these maintenance is relatively limited.” International trade futures analyst Chen Sheng said.
At present, in the polyester industry chain, the unscheduled maintenance announcement of PTA unit has increased one after another, and some mainstream suppliers have extended the maintenance time and reduced the load. According to the data of CCF, as of March 18, China’s PTA load has decreased to 73.7%, 10.7 percentage points lower than that before the Spring Festival. Later, some factories still plan to implement the maintenance plan, and the load is expected to continue to decline.
However, according to the calculation of the balance sheet, the overhaul of PTA plant will only bring about 300000 tons of destocking in the next few months, and the effect of destocking is general. “Except that the spot in Zhapu region is affected by logistics, the overall spot circulation in the market is not tight. The root cause of this phenomenon is still the current large PTA social inventory.” Chen Sheng said that at present, in addition to bottle chips, the situation of polyester products such as filament and staple fiber is not optimistic, and the overall performance of polyester is low profit and high inventory.
It is worth mentioning that due to the favorable regulation of coal prices by the state, the current coal chemical industry path has better profits.
“In theory, the current profit of oil-based chemicals will be lower than that of coal-based chemicals, the operating pressure of petrochemical plants is relatively large, and there are many news of reducing load and production.
But for a specific plant, the possibility of switching between different processes is relatively low. ” Ye Chen explained that coal chemical enterprises have certain advantages over oil chemical enterprises in terms of cost, but the switching of units needs to consider the requirements of process capacity and comprehensive endowment. At present, there is no relevant phenomenon.
In this regard, some plastic manufacturers said that if there is not much profit, they can only reduce production first and finish inventory. In fact, at present, the load of PP / PE petrochemical enterprises has decreased significantly, and some units are overhauled in advance to deal with losses.
According to statistics, in March 2022, the maintenance units of PP and PE refining and chemical enterprises continued to increase. The maintenance capacity of PP abroad was nearly 4 million tons, and the annual maintenance capacity of PE in China was 4.18 million tons.
“At present, olefin upstream plants (especially oil plants) bear the brunt. Due to the problem of large losses, their daily production and sales have been seriously affected. Coupled with the risk of high inventory and high cost, they have to consider active adjustment during production to alleviate the operating pressure.” Ye Chen said that in the face of high oil prices corresponding to high propane prices, PDH enterprises have always been difficult to repair anti seasonal losses. “The whole chain of propane propylene polypropylene has suffered losses, and PDH, together with the outward mining monomer enterprises, has also partially reduced the burden, and even stopped.”
“Judging from the current operating rate of the whole olefin, the negative reduction has not achieved the effect of reducing losses.” In Ye Chen’s view, on the one hand, because some maintenance and decline are still in the planning stage, on the other hand, the cost side fluctuation is still increasing, but the high price sales situation is poor. In the short term, relying on the industry’s own regulation behavior can not fully alleviate the business pressure.
derivatives become a sharp tool for enterprises to stabilize operation
Compared with previous years, most chemical products lost money this year, and enterprises are also facing the pressure of sharp shrinkage of overall profits. At present, under the high cost fluctuation, how to reduce the raw material procurement cost and lock in the processing profit is an important problem faced by petrochemical enterprises.
“China’s chemical industry sector has a rich variety of futures and perfect industrial chain configuration. Recently, chemical enterprises have been considering cooperating to manage processing fee business. Futures has become a powerful derivative tool for upstream factories to manage processing fee risk.” Ouyang said.
In his view, at this stage, the upstream petrochemical enterprises may lock in costs mainly through energy futures, and lock in factory processing fees when there is profit. For example, processing fee management of MTO, PDH and other enterprises; Downstream product factories mainly lock in the long-term raw material cost through futures varieties such as PP / PE.
Zhang Hao also has deep feelings about this. He has been responsible for PTA market sales for many years, and he is also the “beneficiary” in the futures market. When seeing the negative processing fee of “see you for a long time”, Zhang Hao sighed for the first time that if the enterprise can lock the processing fee through the futures market in advance, it can successfully avoid this risk.
“In theory, PTA factories should lock the processing fee by buying raw materials and selling PTA in the futures market when the processing fee is reasonable (such as 700 yuan / ton). If they do so, they can successfully avoid negative processing fee and exchange the position time for processing fee space through futures.” Zhang Hao said that of course, it is possible that the processing fee has not shrunk after the enterprise locks the processing fee, but it can also be extended and continue to unlock when the processing fee shrinks in the future.
Zhang Hao said that in the past two years, the raw materials have presented a back structure, while the PTA structure is contango, and the risk-free extension income given by the market has reached more than 400 yuan / ton. Lock processing fee has also become one of the common ways for many PTA enterprises to combine future and present.
“In the face of rising costs, PTA integrated enterprises can also hedge by buying crude oil futures, and make up for the losses caused by the sharp rise in the cost of spot raw materials through the rise of futures; in addition, they can also buy crude oil call options, and make up for the losses caused by the rise in spot costs through the profits of options when crude oil rises. If crude oil falls, enterprises will only lose a certain option fee.” Liu Siqi said that similarly for downstream polyester enterprises, they can buy PTA futures and option hedging to avoid the risk of rising costs caused by rising raw materials through hedging.
It is worth noting that compared with upstream enterprises, downstream enterprises are relatively scattered, but their operation is more flexible. In the past few years, they have also begun to try to use derivatives to optimize their own costs.
“Compared with upstream and downstream factories, midstream enterprises participate in the futures market more directly, but they also find that hedging alone can not completely make up for the losses in the trade link. They began to actively try to use the nonlinear profit and loss structure of options to optimize their own risk management scheme, and provide services to upstream and downstream enterprises in combination with trade with rights.” Ye Chen said that at present, effective price risk management schemes commonly used in the petrochemical industry include basis price, trade with rights, processing fee management schemes, etc.
The reporter of futures daily also learned that in recent years, the relationship between the chemical industry and the futures market has become closer and closer, and the phenomenon of pricing chemicals based on futures instruments has gradually become common. Through the combination of time and cash, industrial enterprises have stabilized the production and marketing relationship between upstream and downstream, adjusted market supply and demand, and achieved the purpose of locking production costs and stabilizing production and operation profits.
“Polyolefin futures price has become the pricing benchmark of spot trade. It is more and more common to use futures price plus discount to determine the trade price in the industry.” Zhou Ao said that in the case of sharp fluctuations in raw material prices, manufacturers can lock sales and prices in advance and broaden sales channels through futures point prices; Downstream factories can point prices for many times to avoid the operation risk caused by high settlement price.
According to the interviewees, at present, both integrated enterprises and small and medium-sized enterprises are facing the pressure of profit compression and even loss, so it is very important to do a good job in risk management. “In the past two years, with the significant increase in the price fluctuation of bulk raw materials, it has posed a higher challenge to the risk management level of enterprises. Exchanges and markets need to constantly impart mature risk management experience to entity enterprises to help enterprises use futures tools to solve the risk of high price fluctuation.” Liu Siqi said.
