I thought 2019 would be the worst year, but I didn’t expect that it might be the best year in the next three years.
Some time ago, the textile market revolved around “order cancellations”, “no orders to make” and “foreign trade suspension”. Recently, market participants are most concerned about “operating rate” and “inventory”.
Recently, except for melt-blown fabrics and non-woven fabrics, other conventional varieties on the market can be said to have entered a “dead end”. The serious shrinkage of terminal demand has led to insufficient follow-up of market orders. It can be said that “you have to queue up even to drink the northwest wind”. Foreign trade and domestic demand have both fallen again, severely suppressing the weaving market.
Reduce the operating rate
To stop losses, many weaving manufacturers reduce the operating rate or shift from two shifts to three shifts to reduce costs. At present, the operating rate of looms in Jiangsu and Zhejiang is below 70%, while it was around 90% in the same period last year. Moreover, after the Qingming Festival last year, the market began to go downhill and did not usher in the “Silver Fourth” in the traditional sense. It can be seen that , this year’s off-season did come a bit early.
Control inventory accumulation
Without orders, weaving manufacturers have no choice but to reduce production. Otherwise, gray fabric inventories will continue to rise, and we may face a more terrifying overcapacity situation than in 2019. As of now, the inventory of weaving enterprises in Jiangsu and Zhejiang has risen to around 42 days, approaching the highest inventory level last year.
As soon as Mr. Zhang owned 300 looms, he said: “Currently we have no orders. , all foreign trade customers are suspended. Without orders, the most important thing is the inventory problem. Now there are about 300,000 meters of inventory. Without orders, inventory accumulation is absolute, so during the Qingming Festival, 1/3 of the stores were closed during the holiday. Machines and workers have also changed from two shifts to three shifts. The market situation is really bad. It seems that we can see the end at a glance. There may be a 7-day holiday next May Day.”
At the same time, Mr. Zhu, who specializes in artificial silk, also said that the market will not be good after the year, and the order situation is very unsatisfactory. Orders from the beginning of the year to now have dropped by nearly 70% compared with the same period in previous years. This is still a relatively conservative estimate. Although the looms are currently running at full capacity, they are basically making inventory. If the market does not improve by the end of the month, we will consider reducing production. After all, raw materials, labor, water, electricity, and inventory are all money. According to the current situation, it is difficult for the market to make a big reversal, and it will be a matter of time before the machine is shut down.
In addition to orders, availability, and inventory, the hot topic in the textile industry is raw materials!
The continuous decline of raw materials in the past six months has put significant pressure on the confidence of the textile market. The continuous bottoming out of raw material prices has caused both the volume and price of the gray fabric market to fall. We all know that the price of raw polyester filament has been affected by PTA and MEG. If the cost end is slightly loose, the price of raw materials will fluctuate, and the prices of PTA and MEG are affected by the crude oil market. It can be said that the price of polyester yarn is basically consistent with the trend of crude oil and polyester raw materials.
But in the past two days, the crude oil and polyester markets seem to have “parted ways.”
On April 9, due to Mexico’s boycott, the negotiations on the OPEC+ production reduction agreement ended in vain. The international crude oil market experienced a “night of great shock”. Brent crude oil futures prices once rose more than 10%, closing down 2.73%. The trend of New York crude oil futures was basically the same, rising nearly 13% at one time. After the news of the breakdown of negotiations came out, it quickly plunged, closing down 7.57%.
As a basic raw material, every significant fluctuation in international oil prices will have a significant impact on the entire polyester industry chain. However, while the crude oil market has plummeted, the polyester market has been quite calm, changing from its previous pace of rising and falling crude oil prices.
In terms of PTA, on the 10th, the main PTA 2009 contract of Zhengzhou Commercial Exchange closed at around 3,576 yuan/ton, an increase of 10 yuan/ton compared with the previous trading day, an increase of 0.28 %.
As for ethylene glycol, on the 10th, the main ethylene glycol 2005 contract of Dalian Commodity Exchange closed at 3,451 yuan/ton, an increase of 40 yuan compared with the previous trading day. / ton, an increase of 1.17%.
In terms of polyester filament, boosted by the rise in crude oil last week, the price focus of various polyester filament products at the beginning of the week increased by about 200-400 yuan to varying degrees.There is room for adjustment. In the past two days, the price focus of various polyester filament products has remained stable.
The polyester market is running counter to crude oil this time. The editor believes that there are two possibilities.
01The news of crude oil production reduction is overdraft
Since last week, OPEC+ production reduction The news was flying all over the place. On April 2, the market suddenly reported that Russia and Saudi Arabia were expected to “shake hands and make peace” on the issue of production cuts. Affected by this news, international oil prices suddenly rose sharply during the session, with the main WTI crude oil contract rising by 24.67% and the main Brent crude oil contract rising by 17.8%. The surge in crude oil has driven up the futures market. At the same time, most prices of polyester products have been raised.
Subsequently, due to uncertainties in the production reduction meeting, crude oil fell sharply; the U.S. House of Representatives sent a letter to the Saudi Crown Prince, demanding production cuts throughout, and crude oil rose sharply again. Crude oil is on a “roller coaster”, the news of production cuts is overdrafted, and the performance of various polyester products is stable.
02The prices of polyester products have bottomed out
The prices of polyester products No longer fluctuating with the crude oil market, one of the most important reasons is that the prices of polyester products have basically bottomed out and there is no more room for decline. Specifically, the internal price of PTA is currently around 3,340 yuan/ton, and the internal price of MEG is currently around 3,395 yuan/ton; in terms of polyester filament, the price of FDY 150D product is around 5,750 yuan/ton, and the price of POY 150D product is around 5,225 yuan/ton. tons, the price of DTY 150D product is about 7,000 yuan/ton.
Whether it is PTA, MEG or polyester filament, the price is almost at the low level in the past 10 years. Even if the price of crude oil falls again, there is very little room for it to fall further. In addition, bulls will also support their prices at certain points.
Whether it is the crude oil, polyester market or the weaving market, the main factor in the decline is that the epidemic has caused a severe shrinkage in domestic and foreign demand, which makes it difficult to form effective support for the market. Most textile people are basically bearish on the market situation in the first half of the year, and whether demand can recover in the second half of the year is still unknown. With the textile future uncertain, the most important thing is of course to preserve capital. As for surviving, there are endless possibilities.
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