On December 7, the international crude oil price fell sharply, falling below the US$80/barrel mark. However, strangely, as the price of crude oil continued to fall, the price of polyester yarn continued to increase, although the single increase was not It is very large, mainly 50 yuan/ton, but because it lasts for a long time, the overall increase cannot be underestimated.
Why can the price of this polyester be raised?
First, let’s look at several reasons why the price of polyester yarn should not be raised at this stage:
First, there is no support on the cost side. As mentioned at the beginning of the article, the price of crude oil has fallen below 80 US dollars, and the price of polyester “straight tube superior” PTA has also continued to fall, with the internal price falling below 5,000 yuan/ton. The price is just a step away, and the price has fallen back to the level at the beginning of 2022. From this point of view, the cost side does not support the increase in polyester prices.
Second, it is difficult to balance the production and sales of polyester. In recent years, the purchasing pace of weaving companies has changed from the large-scale stockpiling of goods in previous years, and has basically changed to on-demand purchasing. This has made the production and sales data of polyester factories not very good. At around 50%, the difficulty in flattening production and sales naturally leads to high inventories in polyester factories. Currently, the average inventory in polyester factories is 35 days long. Therefore, it is not normal for prices to rise when supply exceeds demand.
So since the cost side is difficult to support the increase in polyester prices, we can only find the reason from the polyester factories themselves. The data analysis surrounding polyester factories is nothing more than the following: production and sales, inventory, profits, and load (capacity, output). From the above, we can easily rule out the factor of inventory. The failure of production and sales to level off means that the increase in inventory is inevitable. Then the reason for the increase in polyester prices is very clear. It can only be because of polyester. Factory profits and loads are at play!
Polyester factory profits urgently need to be saved
How bad have the profits of polyester factories become that they need to buck the trend and raise prices without any support? We can clearly see from this polyester profit trend chart this year. Taking POY profits as an example, before the polyester price was raised, polyester profits had already fallen to the second bottom this year, basically the same as in April and May. However, through the increase in polyester prices, we can see that the profits of polyester have been rising in recent days. Although some specifications are still in a negative profit state, the profits of 150DFDY have been significantly improved.
Polyester plant loads continue to fall
In early November, polyester factories released information about joint production cuts. At that time, it seemed that it did not have much effect. The load fell by only 0.5% in the week from November 11 to 18. This insignificant drop cannot bring a drop of water, but As the off-season deepens, the decline in polyester factory load suddenly increases, falling 4.1% in the week from November 18th to November 25th. The current polyester factory load is around 64.9%, and it is at this point in time that polyester yarn prices start to rise. An ascending channel. Therefore, it can almost be judged that the main reason for the increase in polyester yarn this round is the price protection effect brought by the reduction of polyester load.
To sum up, the continuous decline in polyester prices leading to profit losses is the prerequisite for polyester factories to reduce the burden and protect the price. The reduction is the real trigger for the rise in polyester prices. Of course, with the relaxation of various conditions and factors , demand has also received some short-term support, and it is expected that polyester prices are still expected to rise in the short term. However, even if polyester yarns rise, textile bosses don’t have to worry. The price of polyester yarns has only returned to the level at the beginning of November, and the increase in polyester yarns may also boost the market atmosphere?
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