Since October, with the price of gasoline is strong, LPG substitution advantage disappeared, and continued to close the Eurasian naphtha arbitrage window, naphtha spreads from early October rebounded to $35 / ton at 80 U.S. dollars / ton, was stronger than that of crude oil. But the $80 / ton crack spread is still in recent years, the same period in the history of the late fourth quarter lows, naphtha prices will also be in a seasonally strong, is expected to spread naphtha cracking still continue to uplink space.

Asian PX- naphtha spreads from the beginning of August the highest $430 / ton down to the current $350 / ton, the profit of PX processing was a squeeze, close to last year’s average price level. Although the end of the four quarter Asian PX supply pressure is still large, but in high load and the cost of PTA support, PX profit is unlikely to continue being squeezed, is expected in 11 – December PX- naphtha spreads will remain 330 to 350 U.S. dollars / ton range.

Tight supply just need strong support

From the supply side, in October, Hengli itsumori, MITSUBISHI PTA lead to centralized maintenance of tight supply, to the inventory of about 120 thousand tons, by the end of October, PTA social stock fell to a low level of 1 million 400 thousand tons. Although 10 months late maintenance devices continue to restart, but after entering in November, 1 million 500 thousand tons of Tongkun, Sanfangxiang (600370, shares) 1 million 200 thousand tons of equipment both appear to break down and drop device Hanbang negative, which supply relaxed situation changed, PTA initially expected in November will go to 30 thousand – 50 thousand tons of inventory. At the end of November, Zhuhai BP110 million tons of equipment maintenance plan, without considering the other device in case of failure, PTA is expected in December will remain in a tight balance between supply and demand.

From the polyester production profit and inventory levels, as of November 15th, the average profit in the production of polyester of 440 yuan / ton, hit a new high for the year; finished goods inventory level for about 7 days, significantly lower than last year’s 17 days of inventory. Therefore, the production of polyester business indicators are significantly better than last year, and during the G20 meeting in polyester plant has a large area of work, is expected in the fourth quarter of polyester load will remain high, just need strong support for raw materials.

In summary, crude oil adjustment basically in place, the short-term is expected to rebound, naphtha prices will remain strong, PX profit space is compressed, PTA to maintain a tight balance between supply and demand, to maintain the high polyester load just need to support the formation of the raw materials, and the current PTA spot processing fee is in 400 – 450 yuan / ton low level. We believe that, at this stage should not continue to watch PTA, recommended to do more dips, admission reference interval of 4770 yuan / ton – 4720.