This weekly report is provided by Galaxy Futures on Monday morning, Beijing time. The data sources are INE, DCE, CZC, CME, ICE, and various news sources.

Please note:

1. Volume, Open Interest and turnover include buy and sell (double-side counted); 2. Volume and Open Interest are measured in lots;

3. Turnover (notional value) is measured in 10,000 yuan(RMB);

4. Price is daily/weekly last trading price.

PTA (Pure Terephthalic Acid)

Part A: Review (2018/12/24-2018/12/28)

From December 24, 2018 to December 28, 2018:the closing price of the main contract (TA905 contract) of PTA futures on Friday was 5640 yuan, 378 yuan lower than the closing price of the last trading day of last week. The highest price for this week is 6000 yuan, and the lowest point is 5612 yuan.

This week (2018/12/24-2018/12/28), the total volume of the main contract was 10,464,424 lots, an increase of 1,879,652 lots from last week. After the close of trading this Friday, the open interest of the main contract was 1,061,698 lots, a decrease of 22,026 lots from the last trading day of last week.

11,439,926 lots of China PTA futures were traded during 12/24/2018 to 12/28/2018, and the weekly turnover (notional value) was 331,786 million yuan (RMB), approximately $48.34 billion. The average daily trading volume for the current week was 2,287,985 lots/day.

Part B: Market Dynamics

1. PTA staged supply and demand tension or will become the norm

In 2016 and 2017, only one set of PTA units was put into production. In 2018, there was no new equipment for PTA, and the nominal capacity growth of PTA was slow. In the second half of 2016, the downstream polyester industry was out of the downturn, the demand for PTA increased rapidly, and the PTA operating rate climbed. Considering that the actual capacity utilization rate is already high and the space for improvement is limited, the next round of PTA capacity release cycle will wait until 2020. It is expected that PTA domestic supply growth will be limited in 2019, and PTA staged supply and demand tension will become the norm.

2. PTA import tariff adjustment

Since July 1, 2018, tariffs on imported PTA originating in Bangladesh, India, Laos, South Korea, and Sri Lanka have been reduced from 6.5% to 6%.

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