Recently, international crude oil prices have maintained a volatile and weak trend. However, as a downstream PTA, it has continued to rise and does not follow the routine. The rise in PTA has directly affected the trend of polyester prices. Polyester has maintained a stable trend for two weeks. After stabilizing, the price will be raised today, August 15th.
PTA supply is tight
Although the upstream crude oil end is running weakly, due to the maintenance of the PTA unit, the current PTA plant load is stable at 62.8%, and the supply is tight, thus supporting the price. With this support, PTA’s cash flow has also been restored to a certain extent. The picture below is a list of recently inspected equipment:
In addition, the current PX end has increased significantly, so PTA still has support on the cost end. In the short term, due to insufficient downstream demand, PTA prices will still mainly follow changes in the cost end. Although crude oil prices are currently weak, they will not It is ruled out that there will be a shock rebound, and the restart of the PTA device will also affect the positive situation of tight supply.
Polyester market remains weak
Compared with the tight supply of PTA, the polyester market is still weak. Polyester inventory has increased again after being destocked in July. According to statistics from Silkdu.com, the overall inventory of the polyester market is now concentrated at 24-24. 28 days; in terms of specific products, POY inventory lasts until 24-28 days, FDY inventory lasts around 18-27 days, and DTY inventory lasts around 22-27 days. It can be seen that the polyester inventory is now close to one month’s inventory.
Fortunately, the current polyester load is not too high. According to statistics on August 12, the polyester load was 70.3%, down 0.6% from August 5, basically maintaining the same level. The slight decrease in load is mainly due to insufficient downstream market power. Therefore, under low load conditions, polyester factories can still keep prices from falling without a significant recovery in demand at the weaving end, and after the price of PTA rises, it begins to rise slightly.
The increase in polyester yarn has been predicted by downstream companies. After the price of PTA increased last Friday, August 12, the price of polyester yarn remained stable. Therefore, weaving companies just needed to stock up on that day, and polyester factories increased their sales. On that day, polyester production and sales rebounded to around 118%.
Although the weaving market has not arrived yet, looking back at the market in previous years, we can find that August is still in the off-season. The start of large-volume winter orders usually does not start until the end of August. However, it has now entered mid-August, and the proofing of autumn and winter orders has begun to pick up. , so we may be able to see whether the peak season arrives soon.
As we all know, there was also a reduction in production capacity in the third quarter of last year. Both polyester factories and weaving companies have gained great benefits during this period – destocking. Driven by this wave of destocking , the market has rebounded, so there will be speculation. Will there be such a good opportunity this year?
The editor thinks that maybe we won’t be so lucky this year. Let’s take a look at a picture first, as shown below. You must have seen this picture several times in the article, but today I want to talk about why it is said that there may not be any luck this year. We were so lucky last year. Let’s first look at the green line. This line is a graph of the startup rate of weaving enterprises in Jiangsu and Zhejiang last year. It can be seen that before the third quarter of last year, the startup rate was obviously at a relatively normal level. , and then let’s look at this red line, which is the operating rate curve for 2022 this year. It has been at a low operating rate since April, which is the first time in five years that we have encountered this situation.
So what does this picture illustrate?
It shows that the situation is different. Last year, the inventory was high due to excessive production capacity. However, this year, the inventory is high simply because the epidemic disrupted the market and missed the peak season market in March and April. Moreover, the startup rate was low. It is already in a low operating state, which is basically the same as in the third quarter of last year. Therefore, simply reducing the operating rate cannot be reduced, and it will not bring much dividends to the market. In the end, it still depends on whether terminal demand can recover.
Generally speaking, the current downstream market has not improved much, so the price of polyester yarn is still affected by the cost side. The current supply of PTA will remain tight in the short term, so it is expected that the price of polyester yarn will fluctuate and rise in the short term.
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