The recent trend of raw materials has generally been strong, but in comparison, the recent trend of direct-spun polyester staple fiber has been slightly weaker, and the overall growth rate is not as good as that of raw materials, which has also led to the continued shrinkage of industry processing fees. As of July 14, the short fiber spot processing fee was only 886.42 yuan/ton, and the industry suffered serious losses. So in the later stage, have the prices of short fiber been underestimated? Is it possible to advance the downstream peak season?
In the first half of 2021, the downstream consumption growth of polyester staple fiber is optimistic, but the growth of direct spinning staple fiber production is limited. From January to June, the output of direct spinning staple fiber totaled 3.5325 million tons, up 17.31% year-on-year, but down 6.05% month-on-month; however, downstream consumption still maintained a growth rate of about 8%. Although the performance of the spunlace field was weak, the demand for yarn was obvious The demand for polyester blended yarn has increased significantly. The export of polyester-cotton yarn has reached a high level in the past three years, and the export of pure polyester yarn has also returned to the level of 2019. Moreover, the social inventory of polyester staple fiber did not continue to rise after climbing to a high level at the end of May. Instead, there was a slight destocking phenomenon as factories reduced production and downstream consumption. Therefore, purely from the perspective of supply and demand, the market has not been too negative.
Then let’s look at whether the price of short fiber has been underestimated from the perspective of demand?
Polyester yarn companies’ finished product inventories have continued to decline since mid-June. However, the reason for this wave of polyester yarn company destocking is the rise in raw materials caused by downstream yarn and cloth traders. Preparing stocks in advance, so rather than saying that companies are destocking, it is better to say that industry inventory has been transferred. Then looking at the market situation of the textile downstream, the key to whether the market can be transmitted smoothly lies in the situation of real downstream orders. At present, after the overflow of orders in the early stage, the arrival of new orders by polyester yarn companies has slowed down, and under high temperature and high humidity weather, the operating rate of yarn and cloth companies has declined slightly due to lack of work. The most critical thing is that there is no significant upward trend in printing and dyeing operations. According to previous years, the printing and dyeing operating rate should reach more than 90% during the peak season, but the current industry average operating rate is only around 67.23%. Therefore, the current difficulty facing the market is that terminal orders have not yet been truly transmitted.
Changes in operating rates of printing and dyeing enterprises in major domestic regions
Data source : Longzhong Information
It can be seen that the weak price performance of short fiber is also reasonable. However, the current short fiber spot processing fee space is at an extremely low level. There are still 2-3 sets of short fiber equipment expected to be overhauled in the future. The output of new production capacity released during the year is relatively limited, and July is theoretically the worst time in the off-season market in the past years. According to theory, the industry will gradually usher in the peak season, and the preparation of foreign trade orders this year is expected to be advanced, so the medium and long-term expectations are not bad. </p
