Although European and American stock markets have stabilized and even rebounded slightly recently, the trend of international oil prices is still not optimistic. On March 30, U.S. oil even fell below $20 per barrel, hitting a new low in 18 years. At present, the overseas epidemic situation is becoming increasingly severe, and the market’s concerns about the demand side of crude oil have begun to heat up. At the same time, the oil price war between Saudi Arabia and Russia has not yet shown signs of subside. It is the sharp decline in crude oil that has led to insufficient cost support in the polyester industry, and the prices of polyester raw materials and polyester filaments have also hit record lows.
Polyester raw material inventory reaches new high, price New low
In the crude oil environment where supply and demand are both weak, the domestic polyester industry is also facing a pattern of weak supply and demand. Judging from the current inventory of polyester raw materials, they are at an absolutely high level. At the end of March, domestic PX social inventory rose to 2.2 million tons, a high since September 2017; PTA social inventory will climb to 3.1 million tons, setting a new record high, and ethylene glycol main port inventory is expected to increase to 1.11 million tons , close to the high level in 2019. At this stage, the polyester industry is not only facing high raw material inventory pressure, but also is in a dilemma where high inventory is difficult to channel downstream.
The current pressure faced by the terminal weaving industry comes from insufficient follow-up of domestic sales and reduction of export sales, and the demand for the entire polyester industry is slowly recovering. The superimposition of the crude oil black swan incident has aggravated the wait-and-see mood of the market and further slowed down the transfer of finished product inventory in all aspects of polyester, so that the current inventory of gray fabrics has reached an inventory high of 43.5 days. It can be seen that the entire polyester industry is in a storage accumulation cycle.
Under the influence of high inventory, polyester raw materials across the board have exceeded the historical low in 2008. As of March 30, 2020, the price of PX was US$466/ton, down 18.96% from before 2008; the low price of PTA in the East China market was 3,080 yuan/ton, down 27.53% from before 2008; the new low price of Zhangjiagang Petrochemical MEG was 2,948 yuan/ton, down 16.96% from before 2008. It can be seen that this round of decline is more rapid than that in 2008. One reason is that the cost of crude oil has dropped, and polyester raw materials have been lowered due to the impact of costs. The other reason is that the new production capacity has been released intensively, especially in the refining and chemical industry. Chemical projects and the launch of supporting production capacity have enabled the supply growth of polyester raw materials to grow rapidly since the second half of 2019.
Foreign trade orders have stalled
Although Domestic resumption of work is proceeding in an orderly manner, but currently foreign trade demand is experiencing a second shock. First, affected by the domestic epidemic, the resumption of downstream work is generally delayed by one month, resulting in the delay in the delivery of some foreign orders and cancellation by customers. For the second time, the overseas epidemic spread rapidly after mid-March, and foreign orders were again canceled or delayed. Overseas consumption has stagnated, brand clothing stores have closed one after another, orders have shrunk, and overseas countries or cities have been closed, which has affected foreign businessmen’s inability to receive goods on time.
From the perspective of export sales data, from January to February due to the inability to deliver goods normally due to the domestic epidemic, coupled with the cancellation of some orders, exports dropped significantly by 20%. From March to April, overseas sales As the epidemic spreads, consumption declines, and foreign businessmen are unable to receive goods normally, export growth is expected to continue to decline (currently, the proportion of foreign orders canceled or delayed in March and April ranges from 30-50%).
“Promoting volume with price” has little effect, and reducing production and burden has become the last resort
Affected by the large-scale cancellation or postponement of export orders and the shrinkage of domestic orders, weaving gray fabrics cannot be shipped, and gray fabric inventories are rising again (warp knitting inventories are more than 20 days old, spraying water Weaving inventory is more than 40 days), a few weaving companies began to sell goods at low prices, and the overall mentality of the downstream market was panicked. Recently, major polyester filament manufacturers have shifted from being unwilling to reduce prices to rapidly bargaining. Polyester filament yarn has fallen by more than 20% in the past two weeks. At present, filament yarn has reached the cost line, and FDY has even fallen into a loss. However, even with such a vigorous price reduction promotion, terminal panic is still difficult to dissipate. There are only a few bargain hunters and daily production and sales are only about 50%. Major polyester filament manufacturers with high inventories are once again facing pressure to reduce production. Recently, I have heard that Some major filament yarn manufacturers have taken action to reduce production. In terms of terminals, the start-up of stretch weaving is facing a second correction since last week. The decline in start-up is at the end of March and early April. The periodic correction in start-up may exceed 20%, and it may drop even more during the upcoming Tomb Sweeping Day holiday. .
The market bottom is Where and when can we buy bargains and stock up?
Under the bearish sentiment, this round of decline in the polyester industry is still in progress. After breaking through the previous low, it will seek new support levels. Overall, the decline in the polyester industry in March can be seen as the energy sector’s response to the cost collapse caused by the plunge in crude oil.At the same time, there is a negative impact of the intensified spread of overseas public health events. So in order to explore the purchasing nodes and cycles of the polyester industry, we must start from two aspects. One is the recovery of the demand side, and the other is the stop of the cost side.
From the demand side, although the domestic polyester industry as a whole has resumed operations, terminal inventories are still difficult to digest in the short term, and the impact of terminal foreign trade orders has also weakened to a certain extent. Polyester industry needs. Furthermore, there is no signal to stop the decline on the cost side, and the market stocking cycle has narrowed. It can be seen that the inflection point on the demand side of the polyester industry may rely on the premise of an inflection point on the cost side, resulting in the cost variable having a greater weight among the influencing factors of the polyester industry. As the crude oil market is currently facing multiple uncertainties, including compromises in price wars, follow-up stimulus policies by global central banks, and the turning point of overseas epidemics, it is predicted that short-term low crude oil prices and high fluctuations will become normal. For a long time to come this year, cost factors will be the core driver of pricing in the polyester industry. In the future, the fluctuation range of international oil prices may be between 20 and 25 US dollars per barrel. </p
