With the recent spread and outbreak of the new coronavirus, national and local governments have adopted extremely strict measures to deal with the further spread of the virus. As remdesivir is put into clinical trials and prevention and control measures have been upgraded in various places, and the number of cured cases has increased explosively, the epidemic is gradually moving in a controllable direction. During this period, how will the polyester filament industry be affected?
Figure 1: National epidemic trend chart on February 6
1. Personnel mobility. Judging from the “National Epidemic Trend Map”, with Hubei as the center, the number of infected people in neighboring neighboring provinces ranges from 100 to 999. Among them, 408 people were in Jiangsu, 1,006 in Zhejiang, and 215 in Fujian. Due to the strong ability of the virus to infect, some factories that did not stop during the Spring Festival also stopped for the holiday after the holiday, and workers in factories that stopped before the holiday were unable to return to work. Local governments with severe epidemics have successively introduced policies to delay the start of construction, and local governments have increased support for small and micro enterprises from four aspects: factor costs, finance and taxation, and foreign trade exports. However, certain losses are unavoidable.
Figure 2: National new epidemic trend chart on February 6
2. In order to reduce the entry of non-local residents or household heads, which may cause the spread of the virus, all provinces, cities, regions and even residential areas must strictly control traffic and travel. For example, it is not limited to: highway closures, body temperature checks and disinfection on national and provincial highways, barriers on rural roads, and residential communities reducing the number of times residents go out. For example: “Notice of the Tiantai County New Coronavirus Infected Pneumonia Epidemic Prevention and Control Headquarters on Further Restricting Vehicle Traffic (No. 10)” decided to implement traffic control measures to restrict vehicle traffic throughout the county; “Ma’an Street Epidemic Prevention and Control Article 2 of the “List of Recent Key Work Tips”: Strictly control foreign vehicles; the “Coronavirus Pneumonia” Prevention and Control Headquarters in Xiaoshan District, Hangzhou announced that “ten uniform” temporary control measures will be implemented throughout the district. The end time of such regulations has not yet been notified, which directly or indirectly leads to difficulties in the transportation of products after the holiday and the uncertainty of the return time of corporate employees.
Figure 3: Polyester raw material and filament price trends from January 2020 to the present
3. Raw materials have fallen sharply. Affected by the epidemic, PTA futures prices fell by 339 points after the holiday, a decrease of 7.03%; MEG futures prices fell by 279 points after the holiday, a decrease of 5.98%. Although factory quotations will temporarily remain at pre-holiday levels due to the lack of market trading in the short term, after the market returns to normal, the polyester filament trading center will inevitably undergo significant adjustments.
4. Insufficient excipients. Following the habits of previous years, the inventory of auxiliary materials before the holiday is generally low. Coupled with the obstruction of logistics and transportation, after the holiday, polyester factories – especially large polyester factories gradually have problems with the shortage of auxiliary materials such as cardboard, wooden frames, paper pulp, etc., resulting in lower operating rates. All have declined.
5. Orders and inventory. Due to the delayed start-up of weaving and texturing plants in Jiangsu and Zhejiang, there is basically no obvious demand for raw materials. Although some factories that did not stop before the holiday are on holiday after the holiday, there are still large-capacity devices operating at low load, such as: Hengli, Shenghong, For large enterprises such as Tongkun and Xinfengming, the polyester filament industry will once again face a high inventory industry environment.
6. The start of construction has been repeatedly postponed. Affected by the rapidly spreading epidemic, companies that originally planned to resume normal work on January 31 were postponed to February 3 at the request of the local government. However, with the further outbreak of the epidemic nationwide, the resumption of work by companies was further postponed to February 9. , some regional governments require that factories not be allowed to operate before February 17. It is reported that the earliest factory currently plans to resume suspended production lines on February 6 (the 13th day of the first lunar month), and most other factories have stated that they will postpone it. The current comprehensive operating rate of polyester has dropped by about 15% from the lowest point before the holiday, reaching a low of around 61%.
To sum up, the new coronavirus is mainly surrounded by multiple factors and has a cumulative negative impact on the polyester filament industry. There is a large gap between the cost of polyester raw materials and the current price of polyester filament; high inventory, insufficient auxiliary materials and poor transportation may lead to supply disruptions; whether textile factories with high inventories have good demand for raw materials after resuming work; Many factors interact with each other. It is expected that after polyester factories officially resume trading, the market will have some room to make up for the decline. In the future, we need to pay close attention to the possibility that under the influence of the ongoing epidemic, the raw material end will be more willing to reduce production due to high inventory.
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