For the textile industry, 2020 will undoubtedly be difficult.
The COVID-19 epidemic has disrupted the production rhythm of domestic apparel companies. Export orders are pitifully few, and the domestic trade market is not optimistic. The long off-season makes it difficult for the entire industrial chain to bear the burden.
According to the latest report of the International Textile Manufacturers Federation ITMF, from the beginning of the COVID-19 pandemic on March 1, 2020 to June 8, 2020, Textile orders plummeted by more than 40%. Among them, orders from fiber manufacturers fell by 42%, orders from yarn mills fell by 44%, orders from weaving mills fell by 46%, and orders from clothing manufacturers fell by 37%.
In June, the off-season atmosphere became more intense. In July, the market entered the traditional sales off-season again. The price dropped, but there was still no one to take delivery.
As the upstream of the textile industry, polyester companies can no longer hold on and have begun to suffer losses. They can only reduce production and stop production to protect prices. According to market news, 13 domestic polyester companies have announced plans to reduce or suspend production!
It is reported that since last year, the price of polyester filament has been in a downward channel, and occasionally there are positive news to stimulate the rise. Nor does it last. Without substantial positive support from the terminal, it is difficult for polyester prices to improve. Especially now that the textile market has entered the traditional off-season, polyester prices have started to fall, fall, fall again. As of now, the price focus of various polyester filament products has fallen sharply. The price of FDY products is around 5,500 yuan/ton, the price of POY products is around 5,100 yuan/ton, and the price of DTY products is around 6,700 yuan/ton.
“The recent demand in the terminal textile industry has been relatively poor, and has been in a downward trend since early June. As of July 10, construction started The rate remained at 61.07%, down 9.22 percentage points from the beginning of June. The average inventory of gray fabrics in weaving companies in Jiangsu and Zhejiang exceeded 43 days, reaching the highest level during the year. The average inventory of polyester factories rose to 26-36 days, and is still on an upward trend.” Guoyuan Futures analyst Zhang Xiao said in an interview with a reporter from Futures Daily.
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 a surplus of 100 yuan/ton.
Cao Qing, senior analyst at Bank of China International Futures Energy, believes that at present, the extent of production cuts by polyester companies is not large. 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 plans, due to the relatively large inventory pressure on filament yarns, production reductions are mainly concentrated in the filament yarn segment. POY and FDY have already shown losses since July. state. “As far as we know, the 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 a reporter from Futures Daily.
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 communication with several relatively large polyester companies, in fact, the pressure on the industry is not too great at the moment. It suffered a small loss at the beginning, which is still 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 said.
As the upstream of polyester, the news of production restriction can be described as “adding insult to injury” to PTA and ethylene glycol.
“13 polyester companies will reduce their burdens and pressures, mainly due to losses in polyester factories. The cycle of production reductions is basically Starting from mid-to-early July, but the end period is not yet confirmed.� This shows that the market still has bearish expectations for the later period and has not yet seen signs of improvement. “Zhang Xiao believes that the products included in this joint production restriction involve filament, staple fiber, and chips, which basically cover the main downstream products of polyester. From Friday, the trend of spot and futures prices of PTA and ethylene glycol in the upstream of polyester is also different. It is difficult to see 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 during the global COVID-19 pandemic , under the influence of various countries’ shutdowns of production and production, crude oil prices fell off a cliff, and PTA continued to decline due to this drag. Coupled with factors such as restrictions on domestic transportation and insufficient demand due to the epidemic, PTA inventories accumulated significantly, starting a plummeting mode and hitting new lows repeatedly. . In late April, PTA hit a 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 sharp declines in the futures and spot markets due to poor downstream market demand and insufficient fundamentals. This week, due to the commissioning of the No. 5 unit of Hengli Petrochemical and the restart of Xinjiang Zhongtai Petrochemical, the PTA operating rate remained at 90.07%, which is at the highest level during the year. The processing fee has been hovering at a high level of 700 yuan/ton in the short term, causing the company to undergo maintenance Continuous delays, coupled with the reduction of negative pressure and pressure reduction in 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 Glycol port inventory rose to 1.4221 million tons, an increase of 5.73% from last Friday. The overall atmosphere of the downstream polyester market is relatively weak, and it is difficult to effectively improve in the short term, so the overall sentiment is bearish.
In fact, in addition to polyester companies, textile companies have also begun to restrict production. According to China Textile News, Jiangsu Peixian Textile Association recently issued a joint convention on production restriction: In view of the current impact of the epidemic on textile exports, supply and demand There is an imbalance, and raw material prices remain high, resulting in vicious bidding in yarn sales. In order to alleviate market pressure, after joint discussions and unanimous approval by all member units, it was decided that starting from June 20, each company will limit production for 30 days based on its own operating conditions. %-50%.
It is understood that Peixian County is located in the north of Xuzhou City, Jiangsu Province. It is a major cotton yarn production county in China and an important cotton yarn and viscose yarn production base. It has 510 textile enterprises, with 1.76 million open-end spinning spindles and an annual output of 800,000 tons of viscose yarn.</p
