After the National Day, terminal orders in the polyester industry chain exploded, which in turn led to large-scale terminal replenishment and increased attention to the short fiber market. From October 25th to 29th, the “2020 Fujian Short Fiber Industry Chain Market Research” co-sponsored by Futures Daily, Xiamen International Trade Group Co., Ltd. (hereinafter referred to as Xiamen International Trade Group Co., Ltd. (hereinafter referred to as Xiamen International Trade), and China International Trade Futures) visited short fiber, downstream textile, and upstream Twelve production and trading companies, including PTA and PX, gained an in-depth understanding of the operation and demand of the local polyester industry chain. In this event, the industrial base actively played a role in helping and guiding, further strengthening the connection and exchange between the futures market and the spot market.
The effective demand in the short fiber market is strong
In order to prepare for the “Double Eleven” and “Double Twelve”, terminal orders exploded, which in turn led to a large-scale increase in weaving factories. Scale replenishes raw materials. As one of the textile raw materials, the market of staple fiber also ushered in a wave of pulsating prices after the National Day. In fact, this year, against the backdrop of the impact on most industries, the short fiber market stands out. Both profits and output have increased significantly compared with the same period in previous years, becoming the most eye-catching scenery in the polyester market.
As an important short fiber production and consumption place in my country, Fujian has gathered a large number of upstream and downstream short fiber factories. A reporter from Futures Daily learned that most short-fiber factories in Changle, Fujian, started out as spinning. They began to engage in the textile industry in the 1990s and gradually extended to the upstream in the early 21st century. At present, a number of short-fiber factories integrating textile, staple fiber and polyester have been formed. large-scale chemical factory.
Generally speaking, a good market supply and demand structure is the basis for supporting the market, and this is also true in the short fiber market.
It is understood that in recent years, polyester capacity expansion has been mainly reflected in filament, while short fiber production capacity expansion space is limited, and short fiber production capacity is only 7.6 million tons/year. From the perspective of demand, due to the impact of the epidemic at home and abroad this year, the demand for textile and clothing has shrunk significantly. However, staple fiber products have benefited from the release of demand for epidemic prevention supplies, and the entire industry has performed better than other varieties. For example, composite fibers such as ES fiber and low-melting point staple fiber have been boosted by the production of masks. In addition, since the implementation of the waste ban policy in 2018, the demand for replacement of virgin short fibers for recycling has also increased.
Short fiber supply and demand are in a relatively tight balance, and the product inventory of short fiber factories has remained at a relatively low level for a long time. Since April this year, the inventory of direct-spun staple fiber finished products has been within 10 days. During this investigation, a reporter from Futures Daily also learned that currently, Fujian staple fiber factories are basically operating at full capacity. Excluding the Spring Festival and epidemic maintenance losses, the current output of some companies has increased by 10% year-on-year, and sales are also better than in previous years. In previous years, the market showed the characteristics of off-peak and peak seasons, but this year, the off-peak and peak seasons are not obvious. There has been basically no production reduction after the Spring Festival, reflecting the strong demand for short fiber.
After the National Day, the pulse-like market trend in the short fiber market is also related to the concentrated placement of downstream demand orders from the end of September to October.
In this regard, Zhu Shaowei, general manager of operations of Fujian Jingwei New Fiber Technology Industrial Co., Ltd. (hereinafter referred to as Jingwei New Fiber), said that the domestic epidemic has been effectively controlled, which directly stimulates the return of orders from labor-intensive industries in countries with severe epidemics. In addition, the “Double Eleven” shipping rules have changed. After the National Day, companies focused on replenishing inventory and rushing to produce orders.
Guangfa Futures analyst Zhang Xiaozhen explained that this year’s “Double Eleven” shipping rules have changed. It used to be shipped in 20 days, but this year it was shipped in 5 days. In addition, the cold winter is expected to increase the demand for warm textile raw materials. DTY porous is commonly used in warm products such as polar fleece, and its sales are relatively smooth. In addition, due to the impact of the epidemic, the production of large-scale garment factories in the international market has been intermittent, resulting in delayed delivery of export orders and the return of overseas orders, mainly the transfer of orders from India, which has led to unprecedented enthusiasm in the market for textile raw materials polyester, spandex, cotton, and viscose. Weaving factories are busy rushing orders, and yarn mill inventories have dropped to low levels, forcing them to concentrate on stocking up. As a result, most short fiber factories have almost no inventory, and some are 20 to 30 days out of stock.
During the investigation, the reporter learned that some factories’ textile and clothing export orders were oversold by 1 to 2 months, or even further, and most short fiber factories were also oversold until mid-to-late November. Short-term short-term staple fiber supply is in a tight state. Taking Jingwei New Fiber as an example, they are all loaded and shipped directly after production on the same day, and they are often rushed by customers, which is enough to show that the effective downstream demand is strong.
The sustainability of the boom needs to be verified
“Negative inventory” and “oversold” are common phenomena in the current short fiber market. According to interviews, most short fiber factories in South China are oversold by about 30 days.
In previous years, oversold phenomena were rare, but in June this year, short fiber factories once experienced negative inventories. At that time, this situation lasted for two weeks. In addition, after the National Day, terminal orders exploded, driving terminal weaving factories to replenish raw materials on a large scale. Staple fiber factory inventories dropped sharply, and the average corporate inventory became negative again. In the case of oversold conditions, all the products of the staple fiber factory were booked, and the downstream spinning mills had to pick up the goods every day.
“Short fiber factories are significantly oversold, reflecting the strong demand for short fiber terminals. Although the downstream stocking volume is relatively high, some companies are still willing to stock up due to the impact of subsequent orders.” Dadi Futures analyst Jiang Shuopeng said .
Short fiber procurement is a pulse purchase. Compared with the irregular procurement of filament, the downstream procurement of short fiber is more regular. “Oversold” is a manifestation of terminal impulse purchasing. It actually means that future demand is released in advance, or that the current situation is overdrafting future demand.A system has been formed for cargo hedging, from strategy formulation to compliance and risk control to transaction execution. The operation is relatively mature and has been recognized by the industry.
According to him, Fujian’s leading traders participate in polyester industry chain futures mainly for hedging, and provide comprehensive services for upstream and downstream enterprises on the basis of traditional trade, including personalized pricing models, capital flow , logistics, etc.
“The integration of futures products in the polyester industry chain is the future development direction.” Huang Yanfang said that she hopes to further improve the risk management system, from upstream naphtha, PX, PTA to staple fiber and bottle flakes. It can realize the listing of varieties, including futures and options, providing upstream and downstream participants with a richer selection of hedging tools. In Huang Yanfang’s view, my country is the largest producer and consumer of polyester, and the futures sector of the polyester industry chain has been launched one after another, which will enhance my country’s pricing power in all aspects of the polyester industry chain.
Industrial bases conscientiously practice “teaching and mentoring”
In Fujian, many traders help enterprises through the flexible combination of spot positions and futures positions. Achieve stable operations. While risks are locked in, we provide integrated pricing, financial, and logistics solutions for customers in specific industries to improve the hedging effect of physical enterprises and achieve mutual benefit and win-win results. In this process, Xiamen International Trade not only serves as a leading trader, but also plays the role of an “industrial base”, giving full play to its demonstration and driving role in the integration of industry and finance to help high-quality development of related industries.
The reporter learned that since Xiamen International Trade was selected as an “industrial base”, it has actively provided external training and guidance to enhance industrial customers’ understanding of futures tools. Especially in the current environment, the use of personal operation cases can help industry chain customers truly understand the importance of using futures tools.
As an important polyester production and consumption place in my country, Fujian has gathered a large number of polyester, especially short fiber, upstream and downstream enterprises. At present, Fujian’s short fiber futures market has a good foundation for cultivation.
“Fujian polyester factories are no strangers to futures. After years of development, polyester factories have become proficient in using PTA futures for raw material price management and inventory management. After the listing of short fiber futures, companies have adopted PTA and Short fiber futures are used for price management, inventory management, processing fee hedging, etc.” Chen Tao, executive deputy general manager of the Petrochemical Center of the Xiamen International Trade Supply Chain Division, said that for polyester factories, it has become a consensus to use a combination of futures and cash to operate well. When the device is in the maintenance period, the polyester factory can use the PTA basis to adjust inventory through a combination of futures and cash. When the far-month futures contract is at a premium, sell futures; when the far-month futures contract is at a discount, sell spot.
Although some companies still have certain blind spots in their understanding of futures, when purchasing polyester products, they will also use futures prices to judge their purchasing nodes. For example, when the prices of PTA and short fiber futures rise, their enthusiasm for purchasing polyester products will increase. In the view of the above-mentioned person in charge, polyester downstream enterprises are the focus of market cultivation in the next step.
In fact, under the current market background, the integration of industry and finance is the development trend of real enterprises, and it is also an important means to create synergistic value and improve competitive advantages.
“Integration of industry and finance is the close integration of industry and finance. On the one hand, investment institutions develop to a certain extent and make strategic investment in the industry, forming a combination of finance and industry; on the other hand, futures and industry Innovation closely follows the needs of the industry and realizes the integration of functions.” Chen Tao said.
In Chen Tao’s view, existing mature futures varieties can be used to copy and promote good models, mechanisms and experiences to more industries.
From the experience of Xiamen International Trade, in the process of combining futures and cash, enterprises must fully manage time, quantity, direction, processing fees, risk and margin, and control risk according to price expectations. Make reasonable use of margin policies and conduct comprehensive benefit evaluations. “Enterprises must always pay attention to the operating environment of the industry, including the international environment. For risk prevention and control of PTA futures, it is necessary to prevent hedging from turning into speculation.” Chen Tao said.
Because it has been deeply involved in the field of futures and cash for many years and has a better understanding of the pain points and needs of the industry, Xiamen International Trade starts from the source of industrial demand, strives to open up the futures market through the “industrial base”, and actively guides the polyester industry Chain companies use futures and options tools for risk management in spot trade.
“In the future, we will continue to play the role of ‘helping and guiding’, effectively promoting the complementary advantages of futures market resources, promoting the development of the real economy, and achieving a win-win situation for enterprises in the industrial chain.” Chen Tao said.
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