The price of polyester chips has continued to fall since the beginning of the year. At the end of March this year, the market price of polyester chips hit a new low. Recently, due to the huge earthquake in the crude oil market, polyester chips have also been affected and fluctuated.
As of the end of March, the price of polyester semi-gloss chips fell to 4,300 yuan/ton. The decrease was 28.93% from the beginning of February. Subsequently, OPEC+ finally reached the largest production reduction agreement in history. Polyester chipping stopped falling and rebounded, rising to 4,650 yuan/ton. However, with the recent plunge in the crude oil market, the price of polyester chips fell slightly. As of now, polyester semi-gloss The slice price is 4,350 yuan/ton. It can also be seen from the polyester chip price trend chart that since 2019, the recent period has been the stage with the largest price fluctuations.
Since April, the prices of PTA and ethylene glycol have shown a downward trend. However, the price of polyester chips has rebounded recently. As the main raw materials for polyester chips at the cost end, PTA and ethylene glycol should be integrated. It is said that one will prosper and one will suffer. However, why did polyester chips stop falling and rebound from the two?
Reasons for the constant decline:
“Black Swan” events lead to cost collapse
First of all, one of the reasons for the decline of polyester chips after the year is the collapse of costs caused by the “black swan” event. Since February, PTA and ethylene glycol have shown a straight downward trend. Affected by the recent fluctuations in crude oil prices, as of now, the prices of both have fallen further and are below 3,000 yuan/ton. In terms of ethylene glycol, the decline has also been very fierce, approaching historical lows and only remaining on the edge of 3,000 yuan/ton. Therefore, it has a greater impact on the price of polyester chips.
The spread of the epidemic has caused orders to shrink and production and sales to be sluggish
In mid-March, as the epidemic spread abroad, foreign trade orders shrank significantly, demand from downstream chip spinning factories weakened, resulting in light transactions, and polyester chip prices fell further. Although chip prices have fallen sharply, polyester raw materials are still weak, and downstream chip spinning factories are cautious in purchasing. Downstream chip spinning basically requires a replenishment rhythm, and only when there is a short-term benefit in raw materials, the production and sales of chips will be released in an appropriate amount. Therefore, the price of polyester chips in March was mainly negative.
Reasons for stopping the decline and rebounding:
Polyester staple fiber is popular, driving the production and sales of polyester chips
After the foreign epidemic reached its new peak in mid-to-late April, it stimulated further demand for masks in the global market. The hottest transactions in the downstream textile market are medical fabrics such as hot-air cotton, melt-blown fabrics and non-woven fabrics. Hot-air cotton is as popular as melt-blown cloth, and its price has skyrocketed like melt-blown cloth, and demand exceeds supply. Driven by the low melting point staple fiber of hot air cotton, the supply exceeds the demand and the price rises. Some manufacturers have temporarily closed their stocks and stopped taking orders. With the price of polyester staple fiber soaring and supply tight, low-priced polyester chip-spun staple fiber has become a new product in mainstream demand. At the same time, it also drives the demand for polyester chips. At present, the production and sales of polyester chips are increasing, so that the price of polyester chips has ended its downward trend and turned into an upward trend.
The supply of polyester chips is less than the demand, providing price support
Affected by the epidemic and downstream demand in March, the operating rate of polyester chip manufacturers was low. High, only above 60%. Moreover, polyester chip factories have been in an inventory accumulation cycle. As of the end of March, the mainstream inventory of polyester chip factories was around 25 days. However, due to the recent short-term speculation of hot-air cotton, downstream chip spinners are more enthusiastic about stocking up. The boost in chip production and sales has led to a sharp decline in the current inventory of polyester chip factories. Currently, the spot inventory of mainstream factories is relatively tight, and even oversold. As inventories become tighter, the price of polyester chips has naturally increased.
Market outlook
In my opinion, this upward trend may be difficult to continue. At present, inventory levels in the crude oil market are high and prices are volatile. PTA and MEG prices are expected to fluctuate with crude oil, and prices are more likely to remain low. Recently, medical fabrics such as melt-blown fabrics and hot-air cotton have been strictly inspected, and the number of downstream manufacturers stocking goods has gradually decreased. In addition, the industry has a strong bearish mentality and there is no effective support from both upstream and downstream, so it is difficult for the polyester chip market to continue to rise.
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