When we are in 2019, some bosses said that 2019 is the most difficult year in the past ten years, but it will also be the best year in the next ten years.
I thought it was a joke at the time, but in the blink of an eye, at the beginning of the spring of 2020, when people across the country were celebrating the New Year, Wuhan, a world-class megacity with a population of more than 10 million, suddenly announced that ” Lock down the city.” As someone who was born in the 1980s, this is a historic event because there has never been such a major government initiative in my memory, and this is all to combat the new type of pneumonia that has lost control in the city.
In its earliest days, this type of pneumonia was rumored to be the “resurgence” or upgraded version of SARS. But in the subsequent news, a large number of so-called “truths” that seemed to have been suppressed for a long time began to emerge. Compared with 17 years ago, the Internet has almost made a fundamental leap, because everyone is an independent voice. After the 23rd, you ask the people of the country what is the first thing to do when they wake up? You must be checking your phone to see how many new cases there are today? What new cases have occurred due to restless homeless people running around? For a time, everyone was in danger and every city was in self-examination.
Picture source: Global Network
After the first extended holiday, most people began to miss going to work . As a result, the strictest urban control measures in history were issued. Foreigners please stop going back to the city. Entrepreneurs are strictly prohibited from returning to work before XX day. I write this XX day because this date is almost always changing. From February 3rd to February 10th, I recently heard that it cannot be earlier than February 17th. So, can work really start on February 17th? No one dares to guarantee it.
In the past few days, people have been calling to ask, what will happen next to the market? I thought I could sort it out, share some data with you, and then talk about our views.
As of February 6, we have compiled statistics on the equipment plans and arrangements of dozens of polyester factories and related petrochemical plants in February, as well as the corresponding inventory structure, as follows: Detailed table:
The above data can see that 100,000-500,000 tons of polyester basically choose to stop, while the 500,000-ton scale The above factories have basically reduced their load in stages, with a total production capacity of more than 20 million tons.
Based on the latest total polyester production volume of 55 million in 2019, the overall market load rate is expected to be 64%, and this data is expected to decline further as the epidemic develops.
In addition, the impact of inventory caused by continued production during the Chinese New Year is also polarized. The inventory of factories with a scale of 100,000 to 500,000 tons remains at 17-22 days; while the inventory of factories with a scale of 500,000 tons and above all exceeds 30 days, and the inventory of some ultra-large-scale factories is nearly 40 days.
More than 90% of most small, medium and micro textile enterprises are currently suspended. Some medium-sized enterprises, whose factories were closed during the New Year, have recently been forced to stop due to insufficient supply of auxiliary materials. Logistics still cannot resume normally at this stage. The big reason for this is that “outsiders cannot return to their hometowns”, and even if they return to their hometowns, they will be asked to “not go out” for the time being.
So even if there is an order, it cannot be accepted. This is the current situation downstream. You can’t buy, sell, or start construction. Apart from having to enjoy this rare holiday in decades, the rest is to check my phone at home. On the contrary, there is a greater demand for market information. In 2020, the chemical fiber industry may face a wave of online upgrade and transformation opportunities.
Having said that, let’s look at the futures market that opened earlier than us.
As expected, the market fell by the limit on the first day of the market opening. Many traders within or outside the industry called and asked if they would continue to explore the market in the future. To what extent will the market reach?
Actually, this question is not difficult to answer at all. I only have one question, is the market so bad? Do you dare to go short? Almost everyone on the other end of the phone kept saying, “Don’t dare.” Why not?
The reason is actually very simple, because the market price is close to a historic low. So what was the historical low? It happened in 2015, and it was about 4,207 yuan. From 2015 to now, comparing the cost and the oil price at that time, the oil price is also around 50.
History always repeats itself inadvertently, and we must know how to follow history. At the same time, we must understand a simple truth. It is impossible for products to be free of money, and it is impossible for products to continue to be sold at a loss.
After following these two points, everyone can actually see a clear direction in the logic of the operation direction. The market’s decline actually provides a new opportunity, because based on cost logic analysis, the risk of shorting will be greater, and the so-called bottom that may be hit may be very close. Once the counterattack comes, I am afraid that I will be killed. Keep.
Can we just buy long directly? If you really have a ridiculous amount of money and nowhere to go, you can build a first-stage position lightly, but be prepared for the possibility of adding another one. If this were not the case, staying on the sidelines is currently the first choice. I know the market will come back, but first we have to wait until the signal of rebound is sent out. This is the current view of trading by most people.
Chart 1 PTA device maintenance trends
Chart 2 MEG device maintenance trends
From the analysis of inventory and operating load, the overall inventory basically maintains a relatively normal level, and even partially remains low. Terminal textile companies basically have inventory of about 7 days, or even lower, because they think it will be the same if they buy after the next year. Therefore, when work gradually resumes, the pulse-type sales state may continue to appear, but the bottom price of this pulse-type sales will also gradually increase. After the product price drops to a safe margin, it will be snapped up once the market opens. However, some major manufacturers may not be able to stop them even though they know they will encounter malicious purchases.
Because the difficulty of storing spot goods and the requirements for capital occupation will force them to accept passive sales. To hedge against it, the factory will choose to go long in the disk market to protect the sales of finished products. In this way, the disk means there will be strong support.
It can be concluded that the market will gradually decline with macroeconomic inertia, but it will never encounter panic selling. The market may have strong support at the cost line. A better suggestion is to prepare bullets. It may be a good time to use the trigger after flying for a while.
When spring comes, I believe that chemical fiber people will usher in a wave of Indian Summer. This is an opportunity that cannot be lost in 2020. Always be prepared, maybe in May.
</p
