Can The Pre Production Reduction Save The Stock Crisis Of Polyester Factories?

The time is approaching the new year, with weaving enterprises going on holiday, looms shutting down and workers returning home, the polyester plant has begun to repair and stop production.

In January 13th, a set of 200 thousand tons polyester spinning filament plant was stopped in Wujiang.

A set of 250 thousand ton polymerized spinning filament plant in Taicang has been stopped for maintenance.

Two sets of 450 thousand tons of PET plant in Fujian have stopped feeding and started to stop and repair according to plan.

As of January 13th, polyester production has dropped to around 76%, and is still declining, with a total production capacity exceeding 12 million tons, with production cuts planned.

Overhaul is unprecedented, high inventory is the main reason.

If compared with the past two years, the stock of polyester plant this year is much higher than in previous years.

According to the data monitoring of China's silk net, as of January 14th, the overall stock market in polyester market was concentrated for 10-19 days. In terms of specific products, POY stocks to 4-7 days, FDY stocks to 8-13 days, and DTY stocks to 15-20 days.

　　 In the case of excessive inventory, the market tends to be more pessimistic about the overall market, and the price of polyester is difficult to lift. It is often a wave of market or a good news. The price of polyester has gone up a little, but it will soon fall back, not to mention the continuation of the rally, even to stabilize the rising price.

Under such circumstances, textile enterprises will not naturally buy the expensive raw materials when they are "big heads". The desire to hoard raw materials will hardly be aroused.

Among them, the polyester filament in 2019 is a very good example. Because of the high inventory, the price of polyester factories has no bottom at all. Some of the weaving companies that buy or sell according to their old experience often lose their profits. So by the end of the year, when we asked the weaving enterprises not to hoard raw materials in the new year, almost all the weaving enterprises answered the wait and see and did not hoard.

No money to buy raw materials, weaving enterprises have no intention nor powerless.

Polyester stocks are too high. In the final analysis, it is insufficient to buy gas.

Starting from the transformation of water jet looms in Jiangsu and Zhejiang provinces in 2017, the number of water looms in China decreased first and then increased. In 2019, it was the year when the loom looms concentrated.

Under normal circumstances, the number of looms has increased, and the demand for polyester raw materials will naturally increase, but the opposite is true.

Although the number of water jet looms has increased, the production capacity of grey fabrics has increased, but because of the market environment, the demand for grey fabrics is decreasing. This makes the conventional products such as spring Asian spinning and polyester taffeta seriously overcapacity, and the large amount of inventory of grey cloth inventory of weaving enterprises, and the accumulation of large amounts of funds, but there is no money to buy raw materials.

According to the data monitoring of China silk net, the average annual inventory of weaving enterprises in 2019 was more than 30 days, and the highest reached 42 days or more.

　　 Under such circumstances, the future guarantee of capital turnover and the "dumping" on the market have become a norm, and the price of grey fabrics has been further suppressed, and a large number of conventional products have fallen into small profits or even losses.

The production of products is not profitable, leading to the fact that many factories are full of names in the second half of the year, but enterprises will still reduce production through weekend breaks and reduced scheduling. The demand for polyester raw materials will be reduced obviously.

Looking forward to a good start in the coming year, there will be a turning point in the stock crisis.

The current situation is that the weaving enterprises have large inventory of grey cloth, but the quantity of raw materials is not large, and polyester factories have a large stock of raw materials.

Whether this situation can be revitalized, mainly depends on whether the market can rise quickly after the Spring Festival starts, and whether the market can quickly digest this positive effect after the first agreement between China and the United States is reached.

We will think from the optimistic direction. If the number of us list rebounded, the sales of grey cloth will be promoted. On the one hand, the demand for conventional products will increase, and the large inventory of weaving enterprises can be digested and more funds will be available.

On the other hand, since the raw materials are not large at the end of the year, new orders are bound to require a large quantity of new raw materials to be purchased. Polyester factory stocks have the opportunity to consume, and the price of polyester raw materials is also likely to rise sharply. If there is such a situation, weaving enterprises must remember to supply raw materials after receiving orders.

Of course, all this is built after the Spring Festival. If market demand remains normal after the beginning of this year, polyester stock pressure is still very high and polyester prices will not rise. In the case of textile enterprises' difficulty in "cash in the stock" situation, the routine operation of "dumping" and "dumping goods" in 2019 will probably continue to 2020.