Recently, the biggest news for textile people should be the production cuts and promotions of polyester companies. Thirteen polyester factories announced their plans to reduce production shutdowns, involving nearly 3 million tons of production capacity, causing an uproar in the market.
While announcing the production reduction plan, polyester factories also launched extremely vigorous promotional measures. Some polyester factories The promotion intensity even reached 500 yuan/ton, which can be said to be unprecedented.
Polyester companies driven crazy by inventories and profits
Such a large-scale production reduction, such a generous move Promotions, in the final analysis, it is because the inventory is too high. Judging from the statistics of China Silk City Network, the overall inventory of the polyester market is now concentrated at 27-36 days; in terms of specific products, POY inventory is around 8-13 days, FDY inventory is around 19-26 days, and DTY inventory is around 19-26 days. to about 27-38 days.
This kind of inventory is close to the high level during the year and is still growing.
According to estimates, the current loss of POY exceeds 200 yuan/ton, the loss of FDY exceeds 350 yuan/ton, and the profit level of DTY is relatively stable, with still 100 yuan/ton. tons of surplus.
The production reduction is not strong , Polyester factory promotions have not seen sustained payment, and the market is worried about the possibility of large-scale production cuts in the future
However, even with production cuts and promotions, it is still difficult to see a significant improvement in production and sales in the first half of the year. The incident is only This led to the recovery of the polyester filament market in Jiangsu and Zhejiang regions on July 8, with the average production and sales of mainstream manufacturers at 130%-150%. Although the production and sales of polyester have greatly improved compared with the previous period, it is still difficult to return to the previous prosperity.
Why is the polyester filament on sale “not fragrant”? The reason is also very simple: inventories are increasing, but demand shows little sign of improvement. Many weaving companies cannot withstand the dual pressure of inventory and funds and have begun to reduce production. Currently, the operating rate of water-jet looms in Jiangsu and Zhejiang markets has dropped to about 60%. .
Weaving enterprises operate fewer machines and have no extra funds, so naturally they have no desire to buy silk. At this time, it is normal for polyester production and sales to not increase. For polyester filament, weaving manufacturers have entered the traditional off-season. This year is a special period, and the off-season is even lighter. The current inventory of gray fabrics has risen to about 44 days. Most weaving manufacturers have stated that they have plans to reduce production in the later period, and the start-up rate will then be If it is further reduced, the demand for raw polyester yarn will naturally decrease. At the same time, the inventory of polyester factories has risen to about 34 days, and it is already in a state of accumulated inventory. Coupled with the weakening demand, polyester yarn prices are difficult to stabilize.
On the other hand, Cao Qing, senior analyst at Bank of China International Futures Energy, believes that at present, it is unlikely that polyester companies will reduce production. The magnitude is not huge. Including the 13 companies that plan to reduce production in July, the cumulative production capacity of polyester companies that have implemented maintenance and production reductions totals 2.937 million tons/year. Excluding routine maintenance, the unplanned production capacity reduction is 1.544 million tons/year. She believes that the news has attracted attention mainly because the current polyester market situation is relatively pessimistic, and the market is worried about the possibility of large-scale production cuts in the future.
Judging from the currently announced plan, due to the relatively large inventory pressure on filament yarns, production reductions are mainly concentrated in long-term filament yarns. In the silk segment, POY and FDY have been losing money since July. “As far as we know, factories that have reduced production are also concentrated on these two varieties. Staple fiber and bottle flake factories are relatively more profitable,” Cao Qing told reporters.
Cao Qing believes that speculative mentality is also one of the reasons for the current state. In April, crude oil prices bottomed out and rebounded. The bottom-buying mentality in the industry caused polyester production to rise. Polyester factories and weaving factories have accumulated some inventory. However, currently, crude oil prices are flat, speculative demand has decreased, and polyester factory inventories have increased significantly. According to data from China Fiber Network, the inventory of raw materials for weaving was only about 10 days in January. It has increased significantly since April and has now risen to about 30 days.
“According to communications with several relatively large polyester companies, in fact, the current pressure on the industry is not too great. A small loss at the beginning is bearable for large companies. However, small factories face greater cash flow pressure and will be the first to reduce production. At present, the industry generally reflects that the pressure on the terminal weaving link is too great and they are unwilling to accept goods.” Cao Qing explain.
No one wants to be a “takeover”! The production restriction is “making matters worse” for polyester raw materials
As the upstream of polyester, the news of production restriction can be described as “making matters worse” for PTA and ethylene glycol.
“13 polyester companies will reduce their burdens and pressures, mainly due to losses in polyester factories. The production reduction cycle basically starts in mid-to-early July, but the end period is not yet certain, which shows that the market is still bearish for the later period. As expected, no improvement has been seen yet.��image. “Zhang Xiao believes that the products included in this joint production restriction involve filament, staple fiber, and chips, basically covering the main downstream products of polyester.
From Friday, the upstream PTA of polyester It is not difficult to see from the trend of spot and futures prices of ethylene glycol that the mentality of the entire industry chain is relatively pessimistic and difficult to reverse in the short term.
Entering 2020, the PTA market has opened a downward channel. Especially under the influence of the global COVID-19 pandemic and the shutdown of production in various countries, crude oil prices have plummeted, and PTA has been dragged down by this and continues to decline. In addition, Due to factors such as domestic transportation restrictions and insufficient demand due to the epidemic, PTA inventory has accumulated significantly, starting a plummeting mode and hitting new lows repeatedly.
In late April, PTA set a new record low price. Later, as the epidemic situation gradually improved, crude oil prices rebounded, and PTA also began to rebound slightly. However, as the fundamentals of supply and demand are still weak, the upward momentum is insufficient, and the rebound is limited.
“For polyester factories, under the current predicament, the only way to alleviate the contradiction is to limit production. The current production restrictions are not large and the impact is expected to be limited. If production restrictions continue to be expanded in the future and production starts to fall even further, the contradiction between supply and demand for polyester will be transferred to PTA and ethylene glycol to a certain extent. “Cao Qing said that for PTA and ethylene glycol manufacturers, selling through the futures market is a good method when oversupply occurs and sales are blocked. “It is so difficult this year, and most of the profits of the industry chain are still concentrated in PTA session. I think that in addition to the oligopoly competition pattern of PTA itself, it also has a certain relationship with the help of the PTA futures market to enterprises. ” Cao Qing said.
Zhang Xiao believes that PTA and ethylene glycol have suffered from poor downstream market demand and their own fundamentals. Due to the accumulation of warehouses, the futures market and the spot market have fallen sharply. This week, due to the commissioning of Hengli Petrochemical Unit 5 and the restart of Xinjiang Zhongtai Petrochemical, the PTA operating rate remained at 90.07%, which is at the highest level during the year. And processing fees In the short term, it has been hovering at a high level of 700 yuan/ton, resulting in continuous postponement of enterprise maintenance, coupled with the reduction of negative pressure and pressure reduction of downstream polyester units. PTA still has accumulation expectations in the short term, and the fundamentals are relatively weak. The continued rise in port stocks of ethylene glycol this week is Another reason for the price decline.
According to statistics, as of Friday, ethylene glycol port inventory rose to 1.4221 million tons, an increase of 5.73% from last Friday. And the overall downstream polyester market The atmosphere is relatively weak and it is difficult to effectively improve it in the short term, so the overall trend is bearish.</p
