Recently, many market participants believe that in the context of multiple overlapping political cycles around the world, geopolitics is likely to become one of the main factors affecting polyester market prices throughout the first quarter. Some analysts say international oil prices could soar to $80 a barrel if escalating geopolitical tensions disrupt Middle East crude supplies.
If the international oil price rises to US$80/barrel, the cost support for the polyester market will indeed be It has been significantly strengthened, but the impact of the US-Iran issue and geopolitical conflicts on the polyester industry chain will gradually decrease, and the sustainability will be compromised. What will really affect the market in the future is the solution to the supply and demand problem. The editor believes that if these four things are not solved in 2020, polyester raw materials will not increase this year, and the textile business will still not be good!
Can terminal demand boost the weakening market?
Many people in the industry said that the market was not good in 2019 because their customer sales also shrank. In fact, this ultimately comes down to the weakening of end consumer demand and consumers not paying the bill. No matter how good or cheap the product is, demand will be driven slowly. So, is this still the case for the macro environment in 2020?
Some experts said that from the current economic environment, policy guidance is the only positive factor. Prior to this, the Central Economic Work Conference “focused on stability” and proposed mobilizing the enthusiasm of all parties, strengthening countercyclical adjustments, and implementing proactive fiscal policies and prudent monetary policies.
From the overall perspective of the “troika” of economic growth, investment growth is expected to further decline in 2020, consumption will rebound slightly, and net export contribution will decline. Against this background, the economy will continue to be under pressure, but the pressure will be weaker than in 2019. Textiles and clothing are optional consumption. As the economy continues to slow down, consumers will still cut back on clothing spending, which means that the short-term demand increase in the textile and apparel industry is still unclear.
The uncertainty of Sino-US economic relations has a negative impact on the textile market The impact
In the past year, the exports of major global economies have declined, and my country’s textile export trade cannot escape this vicious circle. The adjustment of Sino-US economic relations has also had a negative impact on my country’s textile industry.
The U.S. tax increase list involves most of China’s chemical fibers, yarns, fabrics, carpets, industrial textiles, clothing and home textiles. According to customs data, China exports to the United States every year The total trade volume of textile and apparel products is approximately US$50 billion.
Against the backdrop of Sino-US trade frictions, industry players have a strong wait-and-see mood, and textile orders exported to the United States have declined significantly. Many manufacturers said that the reason for the sharp drop in orders this year is due to the Sino-US trade war.
Many overseas orders have been canceled due to tariffs. Although some orders are not exported to the United States, the end customers are from the United States. It is self-evident that the long-term and uncertain nature of the Sino-US trade war has put pressure on textile companies.
According to the latest customs data, from January to October 2019, my country’s exports of cotton textiles and clothing to the United States totaled US$9.7 billion, a year-on-year decrease of 13.5%. Imports from the United States The trade volume of cotton textiles and clothing was US$64.39 million, a year-on-year decrease of 27.9%.
Among them, from January to October, my country imported a total of 319,000 tons of cotton from the United States, accounting for approximately 1/5 of my country’s total cotton imports from the world, a year-on-year decrease of 34.9%.
Of course, Sino-US trade friction is one of the reasons for the slowdown in China’s export growth, but it is not the only reason. It also includes the slowdown in global economic growth and the layout of the international textile supply chain. Adjustments and other factors, such as the current outstanding growth in the proportion of international trade in some emerging countries.
Judging from the current signals released by the market, these two factors may slow down in 2020. Especially for Sino-US trade, in the short term, the recovery of the US manufacturing industry and the political factors of the US election, Trump is slightly “friendly” towards China, and the Sino-US trade war has entered the stage of compromise and implementation, which is a good thing!
However, in the long run, since 2018, the factor that has troubled the global economy the most, for the longest time, and with the greatest uncertainty is undoubtedly the adjustment process of Sino-US economic relations. . So far, the two sides have conducted multiple rounds of consultations and negotiations (including two heads of state meetings and 13 rounds of high-level economic and trade consultations), during which there have been many iterations.
Therefore, for the global economy in 2020, the first gray rhinoceros is the uncertainty of the adjustment process of Sino-US economic relations. If this process repeats itself intermittently, And if short-term disharmony spreads to a wider range, it will inevitably cause deep and medium-term negative impacts on the global economy. Because of this, many foreign end customers choose to place orders cautiously, changing long-term orders into short-term orders, and the number of backup orders is significantly reduced, which also inhibits the growth of demand for textiles to a certain extent.
Nearly 5.6 million tons of new polyester production capacity enters the market , who will pay the bill?
In 2019, the development situation of the textile raw material industry is relatively severe.Conflicts, slowdown in domestic demand, and structural adjustments of downstream textile companies have profoundly affected the trend of the raw material market. These factors have led to “undercurrents” in the industry, but this does not affect the layout of the entire industrial chain by the polyester giants.
It is estimated that nearly 5.6 million tons of new polyester production capacity will enter the market by 2020, which reflects a relatively strong leading effect. In 2019, the top three companies in the polyester industry accounted for more than 50% of the market’s production capacity, and this proportion will further increase in 2020.
In the intensifying market competition, old production capacity that does not have an advantage in cost will gradually withdraw from the market, the polyester industry pattern will quietly change, and the continuous improvement of industry concentration will be the future The only way for the polyester industry in several years.
Therefore, as polyester manufacturers gain more say, they can control market prices more easily. When the market goes through survival of the fittest, polyester prices can be expected to bottom out and rebound. Of course, under the current imbalance between supply and demand, downstream weaving companies have relatively poor speculative psychology and are not very motivated to pay. Therefore, polyester prices in the first half of 2020 may Will still linger at the bottom.
Peripheral production capacity dividends are weakening. Can the “rag cloth” crisis be resolved?
In fact, we have always said that the textile market in 2019 is caused by “overcapacity”. The main reason is that under environmental protection rectification, a lot of production capacity has been transferred to inland and central China. Western region, resulting in rapid expansion of its production capacity.
After a year, this year’s market situation has put many textile bosses who built factories in peripheral areas into the embarrassing situation of “small profits and low sales”. Some companies that cannot withstand the pressure have already Start exiting the market. Where there is exit, there is entry. Of course, the number of textile companies that have to be transferred out is still increasing, which means that the transfer of production capacity is not over.
But fortunately, many textile bosses have already suffered a lot and know that continuing to produce low value-added products may still be a “dead end”, so some companies are already preparing. After the start of the new year, we will abandon the production of 290T polyester taffeta, 380T nylon, 300T pongee and other products whose prices have fallen too much. Therefore, these supply sources may decrease next year, which will alleviate the overcapacity of conventional fabrics to a certain extent.
The more we face downward pressure, the more we need to find a way out in a broader scope. Although the market still needs to digest the pressure in 2019 in 2020, compared with the internal and external environment in the fourth quarter, some good news has been released in 2020: the central bank lowered the required reserve ratio to release about 800 billion yuan in long-term funds, and increased support for small and micro and private enterprises. The intensity of support; the RCEP (Regional Comprehensive Economic Partnership) that is expected to be signed this year will stimulate the export market of the textile industry; blind production will be reduced, and companies will be more cautious about increasing production…
The editor reminds textile people that the future situation is complex and changeable. Textile companies should pay attention to changes in domestic and foreign macroeconomic situations, strengthen research and thinking on medium- and long-term development strategies, focus on the end consumer market, and optimize products. We must be prepared to deal with long-term complex environments, improve efficiency, increase effective investment in factors, and guard against various risks caused by emergencies. </p
