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Study On The Relationship Between Cotton And PTA

2012/3/7 14:50:00 80

There is no fixed price ratio between cotton and PTA, showing a wave rising pattern as a whole. After each stage's rise, there will be a recovery process for the parity, but the whole price range will rise to a new height.

Cotton and PTA are the two major futures commodities of the Zhengzhou Mercantile Exchange. The former is agricultural products (000061) and an important raw material for the textile industry. The latter is the product of the petrochemical industry and the raw material of the textile industry.

From the perspective of industrial chain, the price trend of both countries is affected by different upstream industries as well as the common downstream textile industry.

PTA industry chain analysis

PTA is an important bulk organic material and is widely used in chemistry.

fibre

Light industry, electronics, architecture and other fields of national economy.

More than 90% of the world's PTA is used to produce polyethylene terephthalate (hereinafter referred to as PET). PET is divided into polyester chips, polyester films and polyester bottle tablets. The production of 1 tons of PET requires 0.85 to 0.86 tons of PTA and 0.33 to 0.34 tons of MEG (ethylene glycol).

PTA downstream products are mainly polyester fibers. 75% of PTA in the domestic market is used to produce polyester fiber, 20% for bottle grade polyester, mainly for various beverages, especially for carbonated drinks, about 5% for film grade polyester, mainly for packaging materials, films and tapes.

Polyester fiber, commonly known as polyester, belongs to synthetic fiber in synthetic fiber.

Synthetic fiber production accounts for more than 90% of China's total chemical fiber, while polyester fiber accounts for about 85% of synthetic fiber.

Polyester is divided into polyester filament and polyester staple fiber. Filament accounts for about 62% of polyester production and short fiber accounts for 38%.

Filaments are mostly used by textile enterprises, mainly used for cloth making, and staple fibers are generally blended with cotton.

China's polyester production capacity is mainly concentrated in two provinces in Jiangsu and Zhejiang provinces. Zhejiang mainly produces filaments, while staple fiber production is mainly concentrated in Jiangsu.

According to the different characteristics of cotton and staple fiber, manufacturers can choose different proportions to produce different polyester cotton, and the substitution relationship between cotton and staple fiber will result from it.

Substitution of polyester on cotton

In yarn production, cotton, polyester staple fiber and viscose staple fiber are mainly used.

Textile enterprises spin cotton into cotton yarn, then make pure cotton cloth by weaving enterprises, or spin cotton, polyester, short and viscose into blended yarns, then weave them together with polyester filament and viscose filament to weave blended fabrics from weaving enterprises.

Polyester and cotton are important textile materials.

chemical fiber

It accounts for about 90% of the total, while polyester in chemical fiber accounts for about 80%.

Cotton generally accounts for 60% of textile materials, and polyester accounts for 30% - 35%. In theory, the consumption of two is replaced by price changes.

Due to the rise and fall of cotton prices and relative high operation, the proportion of polyester used in recent years has increased rapidly, and the substitution effect on cotton is the most significant.

The substitution of polyester for cotton is not only based on the demand of orders, but also the change of price.

Figure 1 short sticky and short price

(unit: yuan / ton)

Cotton, polyester and short price changes directly affect the price and price changes, and then affect the demand for cotton or polyester staple fiber, resulting in the price of cotton and polyester staple fiber back to a relatively reasonable price difference or price range.

We have observed the changes in the price differentials since 2010, especially the changes in the spread of the cotton prices in the 2010/2011 market. We can see that since 2010, the spreads have also gone up and down.

From this market, we clearly see polyester staple and viscose staple pairs.

cotton

Instead, this substitution began to appear at the end of 2010 and lasted until 3 and April in 2011.

However, with the rapid fall of cotton prices in the late period, the price difference between cotton and polyester and the price stickup of cotton sticky dropped sharply.

Fig. 2 cotton polyester and cotton sticky

(unit: yuan / ton)

Spread

Analysis of PTA and cotton price ratio

From the cost point of view, PTA is the main raw material for producing polyester staple fiber, which accounts for more than 80% of the production of polyester staple fiber. In addition, 75% of PTA is used to produce polyester fiber, which makes PTA and cotton have a certain correlation.

The relationship between PTA and cotton is mainly achieved through the substitution relationship between PTA downstream polyester staple and cotton. Especially when cotton is in short supply and the price is high, the substitution expectation of polyester staple fiber to cotton is strengthened, so that the correlation between PTA and cotton is greatly strengthened.

For example, since the PTA was listed, the correlation between its futures index and cotton futures index is 0.77, but its correlation coefficient has been as high as 0.95 since June 2010. The correlation coefficient between the polyester staple fiber and cotton spot price is about 0.95.

Fig. 3 Comparison between cotton and PTA

Figure 3 shows that there is no fixed price ratio between cotton and PTA, showing a wave rising pattern as a whole. After the rise of each stage, there will be a recovery process for the parity, but the whole price range will rise to a new height.

The fundamental reason for the undetermined price of cotton and PTA is that the substitution relationship is indirect substitution. The change of basic level and the change of economic cycle make it difficult to maintain the relationship between price and price in a fixed interval.

First, cotton production belongs to agricultural products. The output is affected by planting area and weather, and the production is seasonal.

PTA is a chemical product, and its output is greatly influenced by raw material supply and operation rate. The production is continuous and the variability of output is strong.

Second, in terms of demand, the competitive relationship between cotton and PTA is precondition for the smooth pmission of polyester price by PTA price.

When PTA and polyester staple fiber prices deviated greatly, their relevance to cotton also disappeared.

For cotton, whether the enterprises should adjust the proportion of polyester staple and cotton in spinning raw materials, not only depends on the price difference, but also on the demand for orders, which also weakens the substitution relationship.