After experiencing a sharp rise after the National Day, polyester staple fiber began to gradually decline in late October, and fell again to close to the previous low level in mid-November. In the next half month, it began to fluctuate at a low level, and downstream demand In the context of not being optimistic, industrial customers were originally bearish on the market outlook. However, since the beginning of December, polyester staple fiber has begun to rise again. It was thought that the “three-day tour”-style rising market has continued to this day, and most industrial customers are confused. .
Then the question is, are the supply and demand fundamentals of polyester staple fiber really good? Is terminal demand really optimistic towards the end of the year?
Figure 1
Let’s look at a piece of data first, that is Corporate inventory of polyester staple fiber. As shown in the figure below, since 2020, the inventory levels of short fiber companies have been well controlled. Except for high corporate inventories in the first quarter, corporate inventories continued to be at low levels throughout the second quarter.
Although affected by the epidemic at the beginning of the year, the polyester staple fiber market was in dire straits in the first quarter like other polyester products. The industry start-up was even much lower than that of other products. However, after the end of March , the emergence of the bargain-hunting market has allowed polyester staple fiber to gradually destock, and the market driven by non-woven fabrics in April has helped companies to quickly destock, and it was even oversold for a time, which also led to a rapid increase in the industry’s operating rate.
The concentrated replenishment of downstream and futures dealers around the National Day also helped companies to quickly destock. The company’s inventory even became negative for a time, and it has continued to this day. But it is worth noting that the inventory here is the company’s equity inventory, and the actual physical inventory should be around 10-20 days. So the next very important issue is the dispute between equity inventory and physical inventory.
Based on the current situation, although the company’s physical inventory is mostly around 10-20 days, the large amount of inventory reserved by current merchants has not been delivered except for the expiration period. In addition, there are still many yarn mills and traditional traders whose short fiber has not yet been delivered. From this point of view, even the actual physical inventory does not put great pressure on enterprises. And there are maintenance plans for two sets of devices in December, so the actual supply pressure of the company is generally low.
Recent direct spinning staple fiber maintenance/restart schedule:
So, based on the current supply pattern, short fiber will increase price basis. But if it continues to rise in the future, will the downstream industry be able to bear it?
According to the practice in previous years, the downstream funding situation at the end of the year is generally tight. What’s more, it is difficult to increase the volume of foreign trade orders caused by the decline in overseas demand this year. Even if the price increase of short fiber can be transmitted To the yarn mills, it is extremely difficult for the price to continue downwards after the yarn mills have increased, and it is difficult to see substantial improvement in terminal demand, so there is great resistance to the continued rise of short fiber.
From a cost point of view, although PTA has continued to perform well recently due to tight supply of circulating goods, the contradiction between supply and demand in the industry is still prominent against the backdrop of a substantial expansion cycle; ethylene glycol is also Market gains will be restrained by the recovery of imports and the increase in forward domestic supply.
Taken together, although the supply pressure of polyester staple fiber is low, the spot market has limited room to continue to rise under the expectation of weakening demand at the end of the year; looking at the futures market, the industry has placed its hopes on The expected recovery in global demand brought about by the gradual vaccination of many countries has made the valuation of next year’s 05 contract too high. However, the continued weakness of the short fiber basis also shows that the spot fundamentals are not very optimistic, and we still need to be cautious when chasing higher. </p
