Since the spread of the global epidemic in March and the price war between major international oil-producing countries, falling prices have become the mainstream of all markets around the world. Whether it is stocks, crude oil or even safe-haven commodities such as gold and silver, they cannot escape the fate of falling. Even if there are occasional rises, most of them are “returns to the past.”
In terms of international oil prices, due to Russia’s unwillingness to cooperate with Saudi Arabia in reducing production, Saudi Arabia recently launched a comprehensive oil price war, and international oil prices fell to around US$20 at their lowest.
The U.S. stock market is even more exaggerated. It has experienced unprecedented four circuit breakers this month. The market has fallen by nearly one-third. The Dow Jones Index has fallen by nearly 10,000 points, and has dropped by more than 3 A shares.
The same is true for polyester raw materials. In just one week from March 12 to March 19, PTA’s internal quotation fell by 395 yuan/ton to 3,360 yuan/ton. tons, the internal price of ethylene glycol fell by 390 yuan/ton to 3,515 yuan/ton.
In terms of polyester filament, the price of polyester filament fell this week, among which POY 75D/ The quotations of 36F mainstream manufacturers are around 6500-6600 yuan/ton, while the quotations of FDY 50D/24F products have fallen to around 7800-7900 yuan/ton, and the general decline of various products has reached 200-500 yuan/ton.
Under such circumstances that the price of polyester raw materials continues to fall, weaving companies have become more cautious in purchasing raw materials. Data monitoring from China Silk City Network shows that starting this week, the average polyester yarn production and sales in polyester factories have almost stabilized at around 30-50%. Basically, weaving companies that do not stock raw materials need to replenish small batches of raw materials after the raw materials are used up.
The motivations of weaving companies to do this are also very easy to understand: on the one hand, the prices of raw materials are falling every day, and the raw materials bought today may drop in price tomorrow, which means the more they buy, the more they lose; on the other hand, the prices of raw materials purchased today may drop in price tomorrow. On the other hand, with foreign trade experiencing a downturn, the next market situation is not expected to be very good. At this time, the importance of cash is self-evident.
The highest in history! Polyester stocks are in crisis
As polyester factory operating rates rebound and weaving companies become cautious in purchasing raw materials, polyester factory polyester stocks have reached historical highs.
From the statistics of China Silk City Network, the overall inventory of the polyester market is now concentrated at 33-44 days; in terms of specific products, POY inventory is at 27-34 days, and FDY inventory is at 27-34 days. to around 28-35 days, while DTY inventory is around 34-44 days.
With such high inventory, how to effectively destock must be a top priority for polyester factories.
Polyester raw materials may bottom out at the end of the month
Recently, the price of polyester raw materials has continued to fall. In addition to weak fundamentals, the most important reason is the fall in crude oil prices. Once crude oil prices stop falling and rebound, the decline in polyester raw material prices will most likely stop.
The editor judges that by the end of March, the price of polyester products will reach its lowest point.
Stock prices are difficult to rise, but oil prices can rise
Crude oil is different from the stock market. The recent decline in the U.S. stock market is due to its own bubble and the impact of the epidemic. The decline in crude oil prices is more due to the price war between OPEC countries, led by Saudi Arabia, and non-OPEC countries, led by Russia.
If the stock market falls because economic risks and the development of the epidemic are not dependent on human will, then the fall in crude oil prices is controllable. Once several oil-producing countries reach an agreement to reduce production at the same time, oil prices will soon rise in response.
Saudi Arabia is holding back the market, or waiting for the opportunity
The current international oil price has fallen to close to 20 US dollars .
As of the close on March 18, the price of light crude oil futures for April delivery on the New York Stock Exchange fell by US$6.58 to close at US$20.37 per barrel, a decrease of 24.42%. London Brent crude oil futures for May delivery fell $3.85 to close at $24.88 a barrel, a decrease of 13.4%.
For most oil-producing countries, the profits from an oil price of US$20 are already very meager. Recently, there has been news in the market that Saudi Arabia is reluctant to sell to China and the United States. For essential commodities such as crude oil, it is obviously unwise to maintain low profitability for a long time.
The editor judges that a new crude oil production agreement may be reached at the end of March or early April.
Polyester product prices are near the bottom
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For polyester companies, the losses caused by the short-term collapse of oil prices are huge. Both PTA and polyester filament have huge social inventories. If prices fall, the degree of depreciation of polyester raw materials in inventory will be higher. On the other hand, when raw material prices continue to fall, it will be difficult for downstream weaving companies to become motivated to buy.
For weaving companies, when the price of raw materials rises, although some weaving companies that are under cash flow pressure will not have the money to purchase large quantities of raw materials, there will also be some operations. Companies with good conditions and stable orders have started to stock up on goods again.
As for why you no longer wait and see? It’s very simple. For crude oil of 20 US dollars, the price of raw materials on the market is difficult to get lower than this price!
The epidemic is getting worse and it is difficult for the fundamentals to improve in the short term
If oil prices resume The rise in polyester raw material prices and the rebound in polyester raw material prices may indeed drive polyester factories to de-stock in a short period of time, but in the long run, it will still treat the symptoms rather than the root cause.
Why are textile people so pessimistic today? The biggest reason is that the fundamentals are really bad, because there is no confidence in the future textile market. As the epidemic continues to rage abroad, foreign trade demand has been greatly suppressed, and foreign trade orders have been frequently canceled, and this situation will not change due to changes in raw material prices.
During the visit, under the influence of inventory pressure and pessimistic foreign trade expectations, many textile companies have expressed their willingness to reduce the operating rate of looms next month. By that time, the road to destocking polyester filament yarns will become more difficult. At that time, perhaps stopping production and reducing production will become the only way out for polyester factories.
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