At the beginning of 2020, the escalation of the situation between the United States and Iran gave the originally sluggish textile market a shot in the arm. The price of bulk textile raw materials has increased, stimulating downstream traders to purchase goods. Some manufacturers are doing well in destocking. It seems that we have confidence in the post-holiday price increase!
Polyester filament: drawn after the festival The desire to increase is urgent!
After experiencing this wave of year-end market conditions, the inventory of polyester filament companies has been controlled within a safe period. Subsequently, as the weaving operation has declined, polyester filament companies have also reduced their load and operated during the Spring Festival. The current polyester filament market is experiencing a long-short market situation, and the desire to increase after the holiday is urgent, mainly based on the following considerations:
1. After the Spring Festival, polyester filament companies have little inventory pressure
Looking at the whole year, Polyester filament inventory mainly has two peaks and three troughs. The first trough appeared before the Spring Festival. At the end of the year, companies reduced their burdens and avoided risks, and offered discounts and promotions before the holiday. The destocking effect was significant. The price trend of polyester filament during the month also showed a state of first declining and then rising. The price difference between high and low during the month was 350 yuan. /Ton. The second trough appeared at the end of June. After the downturn in the first quarter, polyester filament companies had high inventories. It was heard that some companies’ inventories were piled up outside the factory, making capital turnover difficult.
Since May, polyester filament companies have started promotion mode, and inventory has dropped rapidly. By the end of June, the overall industry inventory has dropped by 18-19 days month-on-month. . Correspondingly, prices have also continued to increase. In early June, the focus of negotiations on polyester filament POY150D/48F was around 7,450 yuan/ton, while in early July the price was raised to 8,900 yuan/ton, with a price difference of 1,500 yuan/ton.
According to this logic, low inventory is an important driving force for the rising market. At present, the inventory of the polyester filament industry is at a low level, and companies still say that they still have plans to promote destocking at the end of the year. It is hoped that the inventory at the end of the year will be controlled within a week. Even if there is a certain accumulation of inventory during the Spring Festival, overall, there will be little inventory pressure on polyester filament companies after the Spring Festival.
2. The load of polyester filament is still at a high level, and the contradiction between supply and demand in the industry is highlighted
The above table shows the recent statistics on the maintenance of polyester filament yarn equipment. In December, the production capacity of the equipment was reduced by about 2.4 million tons. Before the Spring Festival, the maintenance capacity involved was about 4 million tons. In addition, The early parking device has not yet been restarted. Overall, polyester filament related maintenance production capacity will account for more than 20% of the country’s total production capacity before the Spring Festival, and the start-up is expected to drop to around 78%.
However, compared with 2018, the start of construction is still at a higher level, and the intensity of maintenance at the end of the year is far less than that of the same period last year level, so the low construction starts in 2019 are not really low.
It is understood that currently, directly downstream of POY, the opening of the texturing factory industry has dropped to around 76%, and the opening of chemical fiber weaving is around 64%. Specifically speaking of the main application areas of polyester yarn, The operating capacity of water-jet looms in Shengze is about 73%, and the operating capacity of water-jet looms in Changxing has dropped to around 60%. Therefore, compared with downstream, the load of polyester filament is still at a high level, so the contradiction between supply and demand in the industry is highlighted.
3. Enterprises are under severe cost pressure and are eager to increase prices after the holidays
As can be seen from the above figure, the trends of POY and FDY are quite similar. Starting from the second half of the year, the trend of DTY diverges from POY and FDY, and the trends diverge. Especially since the fourth quarter, FDY has continued to lose money. Since December, affected by the news of flight closures, the price of ethylene glycol has skyrocketed and plummeted. However, polyester filament has been unable to follow up, and the company has digested part of the increase on its own, so profits have gradually shrunk or even suffered losses. At the end of the year, with the decline in raw materials, the profit level of polyester filament has a tendency to improve. However, FDY is hovering near the break-even line. The cost pressure of enterprises is highlighted, and the willingness to increase after the holiday is urgent.
Weaving market: low-priced gray fabrics may be a thing of the past!
1. Raw materials are “popular” at the end of the year, and gray fabric manufacturers take advantage of the situation to “raise prices”!
Recently, the prices of raw materials have been rising frequently, which has made the textile bosses who have been hovering around the profit and loss line even worse. In particular, nylon products have experienced a large increase in the past two months, and some nylon fabric manufacturers have raised their quotations as early as the beginning of the month. “Recently, the quotation of nylon yarn has increased slightly, but only by a few cents. The sales of nylon yarn have not been good this year. We are transforming into regenerated nylon.” A nylon manufacturer in Wujiang area said.
In the past, weaving companies were not as sensitive to increases in raw material prices as they are now. Under normal circumstances, the cumulative increase in raw material prices reaches 1,000 yuan/ton before the price of gray fabrics increases by 0.10 yuan/meter. So why do textile bosses want to adjust prices when raw materials have only increased by a few hundred yuan recently?�It’s simple, the price has fallen through the bottom and has no way to fall!
In 2019, the entire weaving market has been plagued by overcapacity and imbalance of supply and demand. Manufacturers lack bargaining power and prices have been falling. Many textile bosses have even lost money in order to reduce inventory. Fire sale. This has led to price chaos in the entire market, falling all the way to the lowest prices in recent years: for example, 190T polyester taffeta fell from 1.80 yuan to 1 yuan; 75D 24T chiffon fell from 3.3 yuan to 2.6 yuan; 75D weft-twisted imitation memory fell from 2.8 yuan. to 2.3 yuan;
According to rough estimates, the price of gray fabrics has dropped by as much as 25-45% this year. “The market prices are relatively chaotic this year. Our pongee prices have been kept very low by customers, and we can only place one order. Some products are at a loss, while others are slightly profitable, and we operate at a minimum,” said Mr. Chen from the Wujiang area.
As for the price increase of raw materials before the holidays, Mr. Chen also said that there are “mixed good and bad”. “Raw materials tend to go up before holidays every year, and it’s not unusual for them to go up this year. However, our profits from gray fabrics are already very low now. If they continue to rise after the year, we will also raise prices.”
2. Sino-US relations are still releasing positive signals, opening up a new way out for orders in 2020
Recently, Many textile bosses have said that they will not raise quotations for the time being. On the one hand, the order taking has come to an end, and raising quotations currently has no substantial effect. On the other hand, the inventory in the factory has not been exhausted after all, and the price of gray fabrics will still rise. Lack of motivation. “Although price increases still need to be driven by raw materials, there is not much room for prices to fall further.” said Mr. Yang, another imitation silk manufacturer.
Many market participants said that the past 2019 was just the pain of digesting products with overcapacity. Although the pain is still there, the pain may ease with 2020, after all, it will affect the market. A big “black swan” is changing for the better – China and the United States will sign the first phase of the economic and trade agreement next week! China’s textile and garment industry has always stimulated the foreign trade export-oriented economy with low-cost labor, and also created a golden period in the past few years.
Since the start of the Sino-US trade war, European and American customers have greatly reduced their purchase orders, and some have even canceled orders, and some have even canceled orders. With a year of “love and hate”, most textile bosses have opened up new ways for orders in 2020.
In addition, China-US relations are still releasing positive signals recently: China and the United States will sign the first phase of the economic and trade agreement next week, and the United States will implement the phased lifting of tariffs on Chinese products. . For textile foreign trade bosses in 2020, although the “wolf is coming” story has been heard too many times, it is at least a good start.
3. New season orders are being prepared, and there is a strong demand for fabrics
In addition, gray fabric manufacturers have a large inventory this year. Another major factor is that the downstream garment industry has a large inventory. Due to the expectation of a cold winter the year before last, most clothing companies have stocked up on cold-proof clothing. In addition, this year’s warm winter has led to further slow sales of down jackets and cotton clothing. The clothing industry is afraid to stock upstream, which has also caused a supply and demand for gray fabrics. imbalance. Entering 2020, a new season of spring and summer clothing is also being prepared.
Unlike down jackets, spring and summer fashion has relatively high requirements for styles, so they need to be re-printed and purchased. Therefore, the rigid demand for fabrics still exists. “Currently, we have received orders for April, all of which are imitation silk fabrics. There is not much inventory in the factory recently, and we are busy rushing to make weaving products. The imitation silk fabrics may increase a bit in the beginning of next year.” A company in Shengze area owns Shanghai Said the textile boss of Baitai Loom.
According to convention, after the Spring Festival in previous years, the trading atmosphere in the market will gradually recover, and domestic demand and foreign trade orders will be further released. However, there are too many uncertainties in the market this year. The boundaries between the off-season and peak seasons of the market have been blurred, but what is certain is that although it is difficult for the raw material market to rise sharply, it is also more difficult to fall sharply. Driven by the combination of demand and cost, low-priced fabrics may become past tense! </p
