During the May Day holiday, international oil prices continued to rise, as the market’s expectations for the restart of the global economy and concerns about insufficient storage space for U.S. crude oil eased. Boosted by the news that countries are gradually restarting their economies and continuing to reduce crude oil production, oil prices have completed their third session. The “Five Consecutive Positives” trend of five consecutive days of gains set a record for the longest consecutive rise since July last year.
Driven by international oil prices, polyester raw material prices have also begun to rebound. Under this boost, the price of polyester filament increased by 250-500 yuan/ton. At the same time, production and sales have exceeded 100 for many days, with the highest reaching around 300%.
Such a hot market has really made the market crazy again! However, many people are wondering how much water has been injected into this market?
The situation remains unclear, the crude oil market is “cautiously optimistic”, and polyester products are hovering at low levels
Energy analyst Michael Tran said in a report on Tuesday that the reopening of economies around the world has undoubtedly injected a degree of “cautious optimism” into the crude oil market, and there is reason to believe that the worst supply and demand The imbalance has passed. At the same time, some traders said that after doubling in five days, the rise in oil prices had lost momentum, as concerns about a potentially long and uncertain recovery offset optimism that production cuts would ease oversupply.
After rising 20% on Tuesday to close at their highest level in nearly a month, New York futures fell towards $24 a barrel in Asian trading. Diamondback Energy Inc. and Parsley Energy Inc. have become the latest drillers to cut production in the largest U.S. shale fields, but they said they would consider resuming production if oil prices rise above $30 a barrel.
OPEC+ implemented production cuts of 9.7 million barrels per day starting on May 1, easing concerns that crude oil and fuel storage space will be exhausted. Morgan Stanley believes that the oversupply may have reached its peak, but the market may remain oversupplied for several more weeks;
While the worst for the oil market may be over, Most analysts believe it will take at least a year to return to pre-pandemic consumption levels, and some even doubt that will happen. In the United States, as states reopen, the risk of a second wave of infections cannot be underestimated.
At the same time, as the most basic raw material for polyester products, the price of crude oil has almost doubled, which will naturally drive the rise of various products in the downstream polyester industry chain. However, since 2020, due to the impact of the global market environment, the prices of many domestic chemical fiber raw material products have declined to varying degrees recently. Although the prices of some raw materials have increased, judging from the development of application fields, prices have increased. are all emergency products.
Most raw material prices have declined to varying degrees. For example, the domestic PTA market has continued to fall, hitting new lows repeatedly in April. Textile-related products such as ethylene glycol and polyester filament have hit new lows in recent years.
On the other hand, although the downstream market has begun to pick up compared to the previous period, compared with normal conditions, the current weaving market is still in a situation of oversupply, with high inventory of gray fabrics and tired fabrics. The current situation of inventory has not been fundamentally reversed. Under such circumstances, weaving companies may reduce operations or even close factories. Once such a situation occurs, it will be a big blow to both the inventory of polyester factories and the polyester filament.
The long and short intertwined, the upstream and downstream games will become more intense in May!
The changes in crude oil prices have undoubtedly had a certain impact on the chemical fiber industry. The more downstream products are, the slower and smaller the impact of changes in the price of source crude oil is, which requires a certain amount of time. conduction process. On the other hand, the relationship between supply and demand has also had an impact on the price of raw materials, and the impact is more obvious. The sharp drop in the cost of crude oil in the first quarter, coupled with the contradiction of oversupply, has intensified the decline of downstream petrochemical products. The prices of many petrochemical products have fallen to historical levels. At low levels, both crude benzene and ethylene glycol have seen their prices halve. Most companies have experienced cost inversions and high inventories. Severe inventory backlogs have forced companies to cut prices and remove inventories. This vicious cycle has made it possible for the petrochemical industry to suffer a stampede.
Entering May, the market is still supportive. After all, the production cuts of oil producers and the joint production cuts of OPEC+, coupled with the partial recovery of oil demand, have released short-term benefits for international crude oil as the most upstream of the industrial chain, which has provided certain support for the prices of polyester raw materials and even polyester filament. In addition, judging from the current market feedback, if polyfilament filament prices want to continue to rise, either terminal clothing demand will improve, or the upstream support force will be strong enough.
Although the polyester filament market is highly concentrated, the market can never escape the “supply and demand relationship”, so the upside is limited by the recovery of the weaving and texturing industries.However, judging from the current situation, it will take time for the general environment to turn around, and long-term planning may be needed to unblock the blockade on a large scale or even complete a global economic recovery. Even if the economy is restarted, it is still unclear how much it can recover, and the risk of the spread of the epidemic will be greatly increased, which will create new hidden dangers for the future economy. Due to the serious imbalance between supply and demand, oil prices may still hover around the low level of 20 US dollars in the near future.
As for polyester raw materials, the boosting effect of upstream increases is still very limited. After all, there are no downstream customers to pay for it. Even if the price increases, there is still a price but no market. , faced with the choice of “less loss” or “thank you”, no one dares to take action easily, and the wait-and-see situation will continue for a long time. Of course, there is not much room for the price of polyester filament to fall in the short term. After all, after a long period of price decline, polyester filament has fallen to a very low position. In addition, the pressure on its own inventory is not strong, and there is a strong intention to support the price or increase the price.
In any case, the market entering May will enter the upstream and downstream game stage, and it remains to be seen who will win and who will lose! </p
