On the first day after the holiday on October 8, polyester filament ushered in the fourth price increase!
A large factory in Tongxiang raised the price of polyester POY by 50 yuan today;
Another factory in Xiaoshan raised the price of polyester yarn by RMB 50 today;
Shaoxing No. 1 polyester yarn price rose by 100 yuan today;
Another factory in Xiaoshan raised the price of polyester yarn by RMB 50 today;
A major factory in Shaoxing raised the price of polyester yarn by RMB 100 today;
…
Weaving companies are moderately covering their positions under the guidance of rising buying sentiment after the holiday. Today’s mainstream production and sales are at 114%, an increase of 78% from the end of September.
The cost side supports the sharp increase in polyester yarn
During the National Day, international oil prices continued to rise as OPEC+ decided to cut crude oil production by 2 million barrels per day starting in November, triggering concerns about tightening crude oil prices, and as the Biden administration considered returning to a “hostile” relationship with OPEC+. On the evening of the 7th, the settlement price of international crude oil futures rose sharply, recording the largest weekly increase since March. WTI crude oil futures closed up $4.19, or 4.78%, at $91.78 per barrel, a cumulative increase of 16.59% this week. Brent crude oil futures for December closed up $3.50, or 3.70%, at $97.92 per barrel. In the past week, crude oil has soared 16%!
During the holidays, strong cost support drove mainstream polyester filament factories to raise their quotations many times. Since the 4th, the price of polyester filament has increased. The POY of mainstream polyester factories has increased by 50 per day for 4 consecutive days. In addition, the discount has been reduced by 100-150 yuan/ton. Compared with before the holiday, the actual difference is 300-400 yuan/ton. Around tons. In just one week, the price of raw materials has increased by 300-400 yuan/ton. The cloth bosses of downstream weaving companies are a little confused, and the costs have soared.
Generally speaking, the peak season in September is not prosperous. The chances of downstream water spraying, warp knitting and elasticizing are reduced, and the rigid demand for polyester filament replenishment is not large. In other words, the continued rise of polyester filament is only supported by the cost side, and the demand side and supply side are negative.
Downstream demand remains poor
On the demand side, the operating rate of downstream water-jet looms has been at a low level. Among them, the operating rate of water-jet looms in Shengze area is 60-70%, and the operating rate of Xiaoshao circular knitting machines is only above 40%. From the current terminal orders are mostly maintained until mid-to-late October, so most weaving manufacturers’ machines are running smoothly, while a few manufacturers have few orders. Domestic orders continue to be poor, and foreign trade demand is also shrinking, while orders for “Double Eleven” and “Double Twelve” are mostly small orders and sample orders. Since mid-to-late September, the market inquiry atmosphere has dropped significantly, and the market atmosphere for gray fabric shipments is not good. Since the long holiday in October, the resumption rate of factories has been poor, and some factories have even stated that they will have annual holidays at the end of October.
Polyester production capacity oversupply
On the supply side, due to the severe shrinkage of demand in the entire textile market in the first half of the year, the upstream polyester industry chain has experienced overcapacity. Domestic polyester factories have concentrated on reducing production and overhauling multiple times during the year. However, while manufacturers are reducing production, new devices are constantly being launched. According to statistics, in the first three quarters of 2022, a total of 4.515 million tons of new equipment in the domestic polyester industry will be launched per year, a year-on-year increase of more than 40%. Looking specifically at the products put into production, a total of 2.48 million tons of polyester filament was put into production per year, accounting for 54.93% of the total production during the year. In the fourth quarter, there are still many domestic polyester plants planned to be put into production, involving leading companies such as Tongkun, Xinfengming, Hengli, and Shenghong.
At present, the inventory level of finished products of weaving manufacturers is higher than that of the same period in previous years. Therefore, manufacturers are not very willing to stock up and are mainly focusing on digesting inventory for the time being. Take the production and sales of polyester filament as an example. They are often pulse-like curves, indicating that manufacturers will only replenish stocks before promotions or increases. Without price or news fluctuations, production and sales are almost always very light.
However, in the short term, under the influence of soaring crude oil prices, polyester filament yarns also have an obvious upward trend. The traditional “Silver Ten” starts with the price increase of polyester filament, which can play a certain role in boosting the subsequent market. Although the market in September is not satisfactory, October will be the ordering node for three important events: “Double Eleven”, “Double Twelve” and “Christmas Season”, and demand is expected to rebound. With the help of the cost side, gray fabrics, which have been falling continuously, may be able to stop their decline and even usher in a long-awaited rise.
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