Special Report On Polyester Industry Chain In March 2019: Demand Analysis Of PET Staple Fiber

Core view

Polyester staple fiber downstream is mainly polyester yarn, accounting for about 80% of downstream demand.

In the long term, the growth of polyester yarn is weak, and the demand for short fiber will remain low for a long time.

Besides the extreme fluctuation of raw materials, the profit of polyester yarn is not high with demand.

Short staple industrial chain inventory and short fiber load have a negative correlation, the current demand is good.

First, the demand for polyester staple fiber.

1, polyester short main downstream - polyester yarn.

After the Spring Festival, downstream demand has become a hot topic in the market and the focus of game.

In 2018, the author has made a special study on the demand for terminal clothing and the weaving demand of filament yarn. This time, we will focus on another part of polyester demand: polyester staple fiber. According to CCF, in 2018, the direct output of polyester and polyester in China was 5 million 370 thousand tons, accounting for 11.7% of the total output of polyester.

Source: Zhuo Chuang

The high proportion of downstream yarn used has aroused my interest. If we can evaluate the market of polyester yarns, we can get a general understanding of polyester staple demand.

From the TTEB report, we know that the main polyester yarn in the market is mainly pure polyester yarn (2018 output 3 million 70 thousand tons), polyester cotton yarn (2 million 220 thousand tons in 2018) and polyester viscose yarn (2018 output 1 million 450 thousand tons).

We need to verify whether the short and short spinning demand is brought about by these three products:

Pure polyester yarn is made of polyester staple fiber with a single consumption of about 1.02. Polyester cotton yarn is a blend of polyester staple fiber and cotton. The market is mainly T/C 65/35 and T/C 65/40 products, and a small amount of T/C 80/20 products. The so-called T/C 65/35 is that the yarn contains 65% polyester and 35% cotton. On this benchmark, we estimate roughly 65% of the total consumption of polyester staple fiber.

Polyester viscose yarn is a blend of polyester staple fiber and viscose staple fiber. The market is mainly T/R 65/35, containing 65% polyester and 35% cotton. We also estimate that the consumption of PET staple is about 65% of the output of polyester viscose yarn.

According to the TTEB report, the domestic consumption of PET staple in 2018 is 5 million 404 thousand tons.

This is very close to the estimated 5 million 560 thousand ton deviation of 3%.

Therefore, we basically believe that the downstream of polyester yarn is pure polyester yarn, polyester cotton yarn and polyester viscose yarn 3 products.

To add that, the domestic consumption of polyester staple fiber is 5 million 404 thousand tons, which is not entirely supplied by direct spinning polyester and short. As mentioned in the above proportion, the direct spinning polyester and short polyester products provide about 4 million 200 thousand tons (79%) of the output, and the remaining 1 million 200 thousand tons are supplied by recycled short fibers.

2, polyester yarn market growth is weak in the medium and long term.

Judging from the output performance of polyester yarn in recent 3 years, the growth rate of the market is weak, and even the production of pure polyester yarn in 2018 dropped by 300 thousand tons, representing a negative growth year on year.

Source: TTEB

From other perspectives, we can also see the downturn in the industry from the consumption of polyester and short spinning, with an average annual growth rate of 1% in the past 6 years.

In 2018, the reduction of short and short consumption was mainly due to the soaring price of raw materials in the three quarter and the shortage of recycled polyester and short raw materials.

Source: TTEB

Based on the above data, we can make a medium and long-term judgement for the demand of polyester staple fiber: if the demand of other non-woven fabrics is stable, the demand for polyester staple fiber will maintain a relatively low growth rate in the future.

Two. Effect of yarn profit and stock on short fiber load

The long period of demand does not mean that there is no fluctuation in the short period.

The author wants to borrow some relatively high frequency data, such as the production profit of yarn or the upstream and downstream inventory, and observe their short cycle effects on the upstream and downstream loads, thus obtaining the change of terminal demand.

1, yarn profit VS polyester short load

First, we need to talk about the calculation method of yarn profit, taking polyester cotton yarn T/C 65/35 as an example.

Polyester cotton yarn profit = polyester cotton yarn price - cotton price * cotton consumption * cotton ratio - polyester short price * polyester short unit consumption * polyester ratio - processing cost; cotton unit consumption is about 1.08; polyester short consumption 1.02; processing cost 5000; polyester cotton ratio =0.65:0.35

Considering that polyester staple fibers involve 3 downstream areas, in order to directly compare the relationship between profit and supply and demand, the author further calculates the weighted profit of polyester yarns:

Polyester cotton yarn weighted profit = polyester cotton yarn profit * polyester cotton yarn weight + pure polyester profit * pure polyester yarn weight + polyester viscose yarn * weight of polyester viscose yarn

When we observe the downstream load, we focus on the consumption of short, maximum amount of pure polyester yarn load. It is found that the pure polyester yarn load is similar to the annual data, and the load is kept stable for 7 years.

From the profit point of view, the pure polyester yarn load has a certain correlation with pure polyester yarn profit, but the correlation is not high.

Data sources: tianfengfengyun, Wind, TTEB

Logically, if yarn profit has little effect on yarn start up, the demand for short fiber will also be stable, and it will also have little effect on short fiber load.

Facts have proved that our conclusion is that the downstream profit is limited in connection with short fiber load, but we also notice the change of extreme production profit, such as the 3 quarter of 2018, and the sharp fall of polyester processing profit is accompanied by the reduction of short fiber load.

Source of data: wind and wind

In the first half of 2019, the downstream profits were at a high level, creating favorable conditions for the terminal to a certain extent.

2, polyester short industrial chain inventory VS short and short load

Let's talk about inventory. First, let's look at what inventory data can be traced in the industry chain.

At present, there are 3 short and short stocking chains that can be acquired by the author: short staple factory finished product inventory, polyester mill raw material inventory, and polyester mill finished product inventory.

From historical data, short staple stock in short staple mill is negatively related to raw material inventory of polyester mill, and raw material inventory of polyester mill is negatively related to finished product inventory of polyester mill.

Data sources: Tian Feng Yun, TTEB

The above data conform to the logic of industrial chain inventory pfer, but we do not want to be disturbed by stock pfer in the research process, but we hope to find out the real demand situation.

Therefore, we will sum up all the industrial chain inventory and get the total inventory of polyester and short industrial chain.

Compared with the total inventory of industrial chain, the disturbance of single inventory data is low, which can better reflect the real demand.

As can be seen from the above picture, last October, the industrial chain inventory continued to turn to a low level in history, to a certain extent, reflecting the good performance of market demand.

To sum up, driven by high profit and low inventory, the load performance of short fiber before and after the Spring Festival is much stronger than that of other polyester products. After some years, some research also pointed out that short fiber has entered the business cycle since last October, which confirms the above views.

Before inventory and profit changes significantly, we are still optimistic about the demand for short staple fiber in the near future.

Data sources: Tian Feng Yun, CCF

Three, summary

So, is the current demand for polyester and short?

Yes!

Is demand important?

Not always!

In fact, after all, staple fiber accounts for a relatively small proportion in the lower reaches, and the demand growth is also low. The lack of effort in short fiber demand is not necessarily helpful to grasp the overall demand for polyester.