Buy Another Bullet! Polyester Market Is Expected To Reverse In The Second Half.

Finally, after more than half a month of ups and downs, the market has ushered in a wave of rebound. Especially polyester filament, a few days ago is still in the doldrums, and once again said that the rise has risen; in particular, some POY manufacturers have changed the previous preferential measures, and 17 days have raised the price of 50-100 yuan / ton. Since the weekend, the production and sales of Jiangsu and Zhejiang markets have been warmer. The average production and sales of mainstream polyester factories are over 100%, and some POY manufacturers can reach 300%-550%.

Facing the fickle polyester market, after the huge commodity Daniel market of last year, the price of polyester products dropped sharply after April this year, so that the industry chain people were at a loss. The polyester market after the break has not taken off. At present, the price of polyester filament is still at a low point. Is the market bottoming out? Where will the market follow?

Recent logic of polyester filament rising

1, crude oil rebound, PTA device maintenance and upgrading, price overfall, rebound adjustment potential inevitable.

In the middle of June, crude oil declined slowly, pessimism in trade war eased slightly, and with the recent centralized maintenance of PTA device, the polyester raw material market also showed signs of stop. The price of polyester products has been declining since the same month. The current price is at the lowest point in the same period of the year, which is still more attractive to downstream enterprises with demand.

2, industrial chain low inventory operation, phased production and sales rebound opportunities will be more frequent.

Recently, production and marketing have been reopened every other week. In fact, raw material inventory is relatively low. Polyester filament has opened up a downward path since April, to a large extent, that the downstream weaving factories are not enthusiastic about stocking their raw materials, and have been purchasing on demand, resulting in whether the raw materials are up or down, and most downstream products are purchased according to their own production and there is no stockpiling plan. At present, the short term replenishment can not accumulate the raw material inventory level of the weaving plant. Therefore, the weaving factory that keeps low positions will continue to purchase raw materials one after another.

3, the spanaction is showing signs of improvement. Weaving can not only achieve small quantities of orders, but the market starts to re examine the whole environment.

From the downstream, this year, the trade market of textiles has been a certain problem. Last year's boom and tumble and the bad trade environment this year have led to extreme caution in the market, which makes domestic sales start slow.

The raw material inventory allocation of the whole industrial chain is not very reasonable. But the market is unlikely to remain depressed. There will always be demand. It is only because the macro environment and the decline in crude oil and raw materials have restrained some of the demand.

The recovery of market confidence takes time and some external positive stimulation. This pessimism has been improving since the recent stage. Since June, some textile enterprises in Jiangsu and Zhejiang have been able to make orders from small orders, and the market has begun to re examine the whole environment.

Has polyester been seen in stages? Optimistic about the second half of the market!

Although the weaving Market is still not optimistic, some textile bosses expressed different views. "In fact, raw material recovery is not a bad thing. At least, the price of grey cloth will not drop. Some customers who wait will take the opportunity to bring cloth, which can bring the atmosphere of the whole market in a short time." A weaving boss in Wujiang said.

While observing the production and marketing cycle of polyester factories in recent stages, although the resistance of raw materials is still relatively large in the case of relatively weak downstream terminals, some industry experts also say that the weathervane of polyester market has been spanferred to polyester raw material terminal, which is changing. At present, the market pressure has been very limited, in a short time, in this position is not necessarily fast fermentation, but the real rebound rhythm, but also depends on the downstream terminal changes.

In terms of polyester market, we are more optimistic about the market in the second half. Based on the following points:

1, low cost raw materials are expected to stimulate demand for clothing.

The average price of polyester filament POY in June 2019 was only 7467 yuan / ton. Since 2017, the average monthly price of the last POY was less than 7500 yuan / ton, or in May 17 (7455 yuan / ton). After two years of market trend, we found that after the polyester price hit bottom, low price raw materials effectively stimulated the purchasing enthusiasm of downstream weaving enterprises, and the apparent consumption of polyester filament increased 22% in the 17 quarter of 3.

According to the survey, weaving enterprises generally believe that the cost of polyester raw materials is attractive, and there is not a large number of purchases because the limited funds of weaving enterprises are temporarily depressed in the grey cloth link. The textile and garment industry chain is longer, weaving enterprises purchase filament from polyester factories, process polyester filament into grey fabric through weaving and knitting processes, and garment manufacturers place orders on demand. The weaving enterprises will print and dye the gray cloth according to the order requirements, and then deliver the finished fabric to the garment enterprises to get the money back, and then buy the raw material polyester filament. We believe that once the weaving enterprises can reclaim part of the cash flow from the gray cloth link, low POY raw materials will hopefully stimulate the downstream purchasing enthusiasm and reproduce the 3 quarter of 2017.

2, the completion of real estate is expected to boost domestic textile demand.

Home textile belongs to the demand of the real estate market. At the present stage, the real estate data is negative year-on-year. At present, the demand for home textile is at the bottom of the cycle. National Bureau of statistics data, since November 2017, China's housing completed area for 16 consecutive months, a negative year-on-year growth, while the same period housing construction area has been growing, so far away from the general knowledge of such a significant deviation rate is unlikely to continue, housing can not only new construction and has not been completed.

From 1992 to the present, the negative growth of housing construction in China has been recorded for the longest period of 11 months (from February 2015 to December). We believe that the three or fourth quarter of 2019 will become the peak of real estate completion. The marginal improvement of home textile theory is expected to be realized in the three or four quarter.

3, the end of this round of textile and garment replenishment cycle has little effect on polyester demand slowdown.

2012-2015 years, the rise of the electricity supplier, the clothing industry closed shop, the textile industry chain deep inventory to upstream raw material polyester consumption has played a significant inhibitory effect, 4-5 years after the inventory cycle is the end of 2016 textile and apparel replenishment cycle, and the upstream raw material polyester consumption has brought amplification effect.

At this stage, the market is worried that the end of the textile and garment replenishment cycle will lead to a sharp decline in polyester demand. We believe that the current textile and apparel inventory is not as strong as 12-15 years. The reason is that the 12-15 years' inventory cycle is mainly caused by terminal stores. From the data disclosed by the representative listed companies of brand clothing and home textiles, most companies recorded negative growth in the past 14-15 years, regardless of the number of stores or inventory value. While the growth rate of related businesses and stores in the 18 year reports has slowed down compared with that in 17 years, they are still growing positively. The positive growth of the number of stores is the biggest difference between the current cycle and the 12-15 years.

Terminal clothing demand is phased out, but it will only be postponed.

The textile and garment industry has always said: "look at foreign demand in the first half, and look at domestic demand in the second half". Even if the tariff is imposed, the impact is short, and the effect is relatively limited. From the cycle perspective, the current demand for home textiles is at the bottom of the market. The 19 quarter of the three or four quarter is expected to become the peak of real estate completion, and there is room for marginal improvement in the theory of home textile demand.

From the clothing point of view, according to the seasonal rule, the second half of the year is the time to do autumn winter clothing, and the demand for fabrics will be larger. So overall, domestic demand in the second half of the year will be better than in the first half. If the downstream fabric inventory can be gradually digested, weaving enterprises can withdraw funds and drive the purchase of polyester, then the market may have a decent market.

What do you think of it? (source: sweet clover and her oil and gas partner, Tianfeng securities)