In late July, there were “unusual movements” at the dyeing factories. There were signals in Shengze and Changshu that individual dyeing factories began to increase their activity. Some dyeing factory salesmen said that the number of warehouses began to increase, and the number of dyeing factories began to increase. The operating rate has also increased. According to monitoring, the current operating rate of dyeing plants has increased from 55% in the previous period to 65%.
At the same time, in the near future, polyester manufacturers have also begun to tentatively increase the price of polyester filament. The prices of various products have increased to varying degrees compared with last week, especially for FDY and POY products, the increases have been more obvious. As the end of the month approaches, polyester filament production and sales also have a good performance exceeding 100%.
Upstream and downstream resonance, why does this rebound phenomenon occur?
1. PTA and ethylene glycol prices have risen, and polyester yarn has received cost support
In recent times, The continued wave of bankruptcies in the U.S. shale oil industry has partially offset market concerns about oversupply. The oil market is supported by positive factors, and it is expected that international crude oil prices will still likely rise in the short term. Under the strength of crude oil, the overall cost-side driving force of the petrochemical industry continues to be strong. Affected by this, both PTA and ethylene glycol prices have rebounded, especially for ethylene glycol. Due to the recent slowdown in the growth rate of cargo arrivals, although shipments are average, the slow growth in main port inventory has supported the rise in ethylene glycol prices. Although the price of PTA is rising slowly, it is still better than the previous period. Therefore, the cost-end price has increased and stabilized, forming an effective support for the price of polyester filament. At the same time, the bullish sound released by the downstream has a good effect on market production and sales.
2. Orders for autumn and winter clothing fabrics have entered the “window period”
It is understood that in the second half of the year, the transaction volume of spring and summer clothing fabrics continues to shrink. Orders mainly for imitation silk began to weaken, while the proofing, samples and orders for autumn and winter clothing fabrics in the domestic trade market began to gradually increase. Therefore, during this period, the increase in orders for autumn and winter fabrics from dyeing factories was relatively obvious, especially for elastic fabrics. The market The transaction atmosphere is more prominent.
Is the textile market going to rebound in the off-season?
1. The “disconnect” between weaving and printing and dyeing: there is still a risk of rising gray fabric inventories
From the perspective of the industrial chain, printing and dyeing is in the downstream link of the fabric market. Now that the downstream market has released signals of improvement, is the trade end also performing better? This is not the case. Due to the impact of the epidemic, the ordering model of terminal traders has changed this year. In the past, orders were mostly based on “large quantity and good price”, but this year they have mostly changed to the “small batch, multi-batch” model. “Currently, the work in the dyeing factory has improved, but the transactions are relatively complicated. The order quantity of 20,000 to 30,000 yuan in the factory is already considered a large order.” said a salesperson of a dyeing factory. Therefore, the current market situation has not broken out on a large scale, and the dyeing factories are only partially overcrowded, and there are queues waiting in some links. According to interviews and surveys, traders’ orders on hand have not improved much at present, and many traders even started taking holidays and taking turns in July.
Looking at the entire market, whether it is the weaving end or the trading end, holiday operations are becoming more and more frequent. For textile bosses, although there are currently orders placed by downstream customers, in the face of a market with overcapacity, these limited orders cannot fill the “belly” of every trading company. Therefore, the overall market situation is still relatively tepid and has not appeared. The large-scale recovery in the market has also led to an improvement in the orders of a small number of trading companies, while most companies are still in a “lack of orders” state. Now is the traditional off-season. Even if the domestic trade market suddenly gains strength and ushered in a small wave of market conditions, the transmission to the weaving end is still relatively weak. At present, there is an obvious overcapacity in gray fabric production. Many weaving manufacturers have already kept the inventory on hand at the warning line for about two months. It is difficult to destock the market. Therefore, many weaving factories have still begun to implement high-temperature holidays and load reduction plans. In addition, there are still many uncertainties in the recovery of the foreign trade market, especially the rising trade friction between China and the United States, which has led to some countries being resistant to Chinese products. Therefore, what state will the foreign trade market return to in September and October this year? , is still unknown.
2. The start-up rate of polyester is at a high level, but conflicts are gradually accumulating
It is understood that the downstream procurement of polyester in 2020 has experienced a series of Due to changes in the market, market panic is strong before the Qingming Festival, and polyester factories are facing high inventory pressure of polyester. Even though the price of polyester products has dropped to a record low, and vigorous discounts and promotions are carried out, downstream purchasing willingness is still limited. Later, as the overseas epidemic showed signs of improvement and polyester prices were at historically low levels, downstream sentiment began to improve. After May, the number of trial orders has increased, and downstream purchasing sentiment has been high. Entering the second half of the year, the overseas epidemic is still continuing, and high inventory and finished product inventory have caused downstream purchasing sentiment to subside. Terminals will also enter the off-season after July, and the inventory accumulation at the polyester end will continue to intensify, and inventory pressure will continue to increase. Similarly, the profits of the polyester end are also under constant pressure and will continue to narrow in the future.
At present, the impact of the epidemic in Europe is gradually fading, and the marketAfter returning to normalcy, export orders will gradually pick up, but the market is worried about the extent to which orders can be restored: on the one hand, whether the overseas epidemic will recur, and on the other hand, residents’ income has dropped sharply after the impact of the epidemic, and consumption of textiles and clothing has increased. cautious. At the same time, overseas anti-dumping investigations into Chinese filament, yarn and other commodities have increased, making it difficult for overseas orders to return to pre-epidemic levels. Therefore, in the short term, the polyester segment is relatively healthy. Polyester cash flow has recovered, inventory has declined, and the operating rate has remained high. However, if there are doubts about the sustainability of terminal demand, polyester inventory accumulation is expected to be strong in the later period, but only in the case of low inventory. Down, the contradiction moves back.
It is worth mentioning that polyester is still in its production expansion cycle. It was originally planned to put into production 5.5 million tons in 2020. However, due to the epidemic, polyester production plans have been delayed. Currently, only 5.5 million tons of polyester are put into production. 1.75 million tons. The growth rate of terminal texturing and loom demand has gradually slowed down, and the prosperity of the polyester industry has gradually declined.
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