The Cohen & Steers Tax-Advantaged Preferred Securities and Income Fund (PTA) continued to experience low processing fees in October. As the month drew to a close, news of an upcoming industry symposium boosted market sentiment, leading to a rebound in PTA prices. Market participants are closely monitoring potential production cuts by PTA producers amid low processing fees, with expectations of a rise in spot prices.

**Weak Reality vs. Strong Expectations** The PTA market is currently caught between weak fundamentals—ample spot supply—and strong expectations of potential production cuts. Anti-involution sentiment has strengthened, driving PTA prices higher on October 27. Despite sufficient spot supply, including trial production from a new 2.7-million-ton PTA facility in East China, the market has been buoyed by news of the upcoming symposium. Major suppliers are expected to attend, and some analysts anticipate coordinated production cuts to push prices upward.

**Forecast: Increased Maintenance but Limited Market Impact** While PTA plant maintenance is expected to rise, the effect on the market may be limited due to abundant spot supply. Maintenance could temporarily slow inventory accumulation, but with crude oil oversupply and lack of sustained bullish momentum, a significant price rally is unlikely. Some major suppliers already have substantial idle capacity, making new production cut agreements challenging to coordinate. No new PTA capacity is expected in 2026, suggesting a moderate recovery in profits. However, year-end production cuts could risk market share loss during annual contract negotiations.

**Bullish Drivers: Anti-Involution Expectations Amid Low Processing Fees** As of October 27, the average October processing fee stood at 154 yuan/ton, down 15% month-on-month, leaving PTA producers in the red. Since July, the daily average processing fee has been 203 yuan/ton, with producers facing significant theoretical losses—especially those without integrated PX facilities. Additional bullish factors include progress in trade negotiations, which could benefit commodity markets and textile exports. The industry needs demand-driven support from downstream sectors rather than just supply-side cuts.

**Bearish Drivers: New Capacity and Peak Demand Season Ending** The new 2.7-million-ton PTA facility in East China has begun trial production. While older plants may shut down once the new facility stabilizes, the market must absorb the additional supply in the medium term. With peak demand season ending in late October, PTA is likely to transition from destocking to inventory accumulation in November. Seasonal trends suggest accelerated inventory buildup from December 2025 to February 2026. The current November futures basis of -70 yuan/ton reflects subdued market expectations.

**Impact: Production Cuts to Determine Short-Term Inventory Trends** The balance between weak fundamentals and strong expectations hinges on production cuts. If producers coordinate significant reductions amid low processing fees, PTA may avoid inventory accumulation in November-December, supporting prices and spot basis. However, insufficient cuts would maintain oversupply, keeping spot basis weak and encouraging futures warehouse receipts registration.

In summary, PTA’s low absolute prices and production losses require bullish catalysts to restore confidence. Anti-involution expectations have temporarily offset the impact of new capacity, but structural oversupply means any price rally is likely to be limited.