As March 9 approaches, the biggest question that has plagued market participants recently is: Is the market really getting better? Will the “Golden Nine and Silver Ten” really come?
Recently, Jiangsu, Anhui, Sichuan, Chongqing, etc. have started the “orderly power consumption” mode! The operating rates of polyester factories and weaving enterprises have decreased, the operating rates have been poor, and the inventory pressure of enterprises has continued to increase.
PTA starts low, demand shrinks
The Fed’s interest rate hikes are bad for demand prospects, and the market lacks measures to resist bad news. It is also experiencing the traditional off-season. Therefore, PTA’s unplanned maintenance and temporary maintenance have gradually increased. Last weekend, the average PTA operating rate was 64.9%, compared with 70.6% in the same period last year, a year-on-year decrease of 5.7%. Supported by weakening costs and increased equipment maintenance, social inventories continue to be destocked in anticipation of supply shrinkage, and PTA prices have stopped falling and rebounded. However, the fundamentals of PTA lack substantial benefits. Market supply is growing while demand is shrinking. In the future, PTA market prices will be stable and weak.
Polyester filament is difficult to escape the sluggish production and sales
After entering August, high temperature weather caused orderly power consumption in many places in Jiangsu and Zhejiang regions. As the main concentration area for polyester filament downstream and terminal enterprises, the load of local downstream and terminal enterprises has been continuously reduced. Last weekend, the average load of polyester was 82.2%, compared with 87% in the same period last year, a year-on-year decrease of 4.8%.
The sluggish production and sales data caused by poor demand has further increased the pressure on finished product inventory of domestic polyester filament companies. For the procurement of raw materials, the “buy-as-you-go” model is mostly maintained, and the rigid-need procurement model becomes the mainstream, and the willingness to stock up is significantly reduced. According to statistics, the average production and sales of polyester filament last week was 52%, a month-on-month decrease of 1%, and a year-on-year decrease of 8%. So far, terminal orders have not shown a substantial improvement, new orders are relatively limited, and it may be difficult for polyester filament to escape the continued sluggish production and sales.
The weaving market is slowly boosting and is polarized
The production and sales of the upstream polyester raw materials PTA and polyester filament are sluggish and the demand is weak. Looking at the downstream weaving, it is difficult to have a big market. After all, once the downstream orders increase, it is impossible for manufacturers not to purchase raw materials for production. However, this is indeed the case. The downstream weaving market has not improved much. Of course, there is also obvious polarization.
Recently, it has been reported that domestic and foreign sales orders have been issued in small batches in clusters in Jiangsu and Zhejiang. Some terminal weaving factories said that the market has improved significantly. However, many weaving factories still said that orders have decreased compared with July, and the overall market is still average. Demand is difficult to boost quickly. It can be seen that although the market is partially heating up, it is still difficult to increase the volume of large-volume products such as polyester taffeta, pongee, nylon, imitation memory, pongee, etc., and manufacturers have been trying to find solutions.
“The shipment volume of gray fabrics in July was acceptable, but it feels like August has been slow again. Even if I sit in the sales department for an afternoon, no one may come to ask about gray fabrics,” said Mr. Tian, who is mainly engaged in pongee fabrics. “In July, orders Orders have been issued one after another, and traders have stocked up a lot of goods, but after August, traders have stopped stocking up, and orders have not increased.”
Mr. Hong, a trader, said: “Currently, orders can last until the end of September. Orders for the second half of the year are being placed one after another, and this year’s orders have increased by 30% compared to last year. We mainly make outdoor sports fabrics, and currently we have orders for high-elastic fabric films. It’s more popular.”
Due to the special market situation this year, the weaving end has been repeatedly hit by overcapacity. Conventional chemical fiber fabrics have large inventories and prices have been falling, causing the weaving end’s profit margins to fall to new lows in recent years. The eternal weaving enterprises that have been deeply affected are operating at a low profit or even a loss even if they have orders, while traders will not lose money as long as they have orders.
It can be seen that although the market is partially heating up, the improvement is not great for larger gray fabrics. Moreover, recently there has been an increase in operations in the market to reduce production and take holidays due to “high temperatures”. According to statistics, the operating rate of looms in Jiangsu and Zhejiang has dropped slightly from last week. Among them, the operating rate of water-jet looms is above 50%, that of warp knitting machines is around 50%, and that of circular knitting machines continues to remain at a low level of about 30%. According to data monitoring from Silkdu.com, the current weaving operation rate in Jiangsu and Zhejiang is 43.81%, a month-on-month decrease of 3.09%, and a year-on-year decrease of 29.59%.
On the one hand, downstream demand is slowly recovering, driving shipments, and on the other hand, production capacity in the high-temperature market has been reduced again. For the weaving market, it can be said to be a process of “relieving pressure.” But whether the “Golden Nine and Silver Ten” will come depends on the recovery of the general environment and the destocking situation of manufacturers.
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