Industry Analysis: Under The "Black Swan" Situation, Polyester Factories And Weaving "Fall More Or Less" Situation

At the beginning of this week, international oil prices swept away last week and began to rebound sharply. But the good news is not long. In the case of the world's epidemics, the international oil price began to drop, and the oil spill fell below the 50 dollar / barrel level.

In March 6th, Russia's boycott of further reductions in Saudi Arabia was resisted by Russia, and the OPEC+ (OPEC and allies) negotiations on the expansion of production in Vienna ended in failure. Stimulated by the news, US oil cloth oil plummeted and oil shares fell across the board.

As of the end of the day, the global oil market benchmark and May delivery of London Brent crude oil futures (Brent crude) price fell 4.72 U.S. dollars, closed at $45.27 a barrel, or 9.44%, the lowest closing price since June 2017. The New York Mercantile Exchange's April light crude oil futures (WTI) price fell $4.62, closing at $41.28 a barrel, or 10.07%, the largest single day decline since November 2014.

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Under the influence of crude oil, the price of polyester products first increased and then fell this week. As of March 5th, the price of PX external market dropped by 26 US dollars / ton compared with last week, and PTA's internal market rose by 15 yuan / ton, and the price of MEG internal market fell by 40 yuan / ton.

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Polyester filament is no exception. After a small rise, it began to fall, and the products decreased by 150-600 yuan / ton.

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Production and marketing, polyester filament prices began to rise at the same time, polyester factory production and sales compared to last week's downturn has also been warmer, the four day average production and sales remained at 8-9 in the vicinity, of which 4 individual polyester mainstream factory production and sales over 100, to reach about 250%. Only on the 6 day, polyester production and sales dropped to 3-4.

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In terms of operating rate, as of March 6th, the polyester plant operation rate slightly increased compared with last week, but it only came to 67.5%, much lower than that of the same period last year. On the contrary, the rate of loom start up increased rapidly, and now it has exceeded 7.

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In such a low polyester start-up situation, although production and marketing does not seem to be high, there is a big difference between the price increase of raw materials and the two hundred or three hundred of production and marketing. The stock of polyester enterprises is actually slowing down. But compared to polyester factories close to 40 days of polyester stocks, such a decline rate is obviously slow.

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Last week Xiaobian made a survey on the strategy of purchasing raw materials by weaving enterprises. Nearly 200 enterprises took part in the research. The survey showed that only 7% of the textile people would buy raw materials in large quantities at this time, but 2/3 of the textile people said they would not consider stockpiling, but they would buy it with the purchase.

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Combined with the above research results, this paper analyzes the production and marketing of this round, and tries to find out the reasons for the recent production and marketing performance.

First of all, this is because the start up rate of weaving enterprises has increased. Most enterprises choose the strategy of purchasing raw materials with the purchase, and the rate of start-up increases. The quantity of raw materials consumed daily will naturally increase, which means that the base of production and marketing of polyester factories has increased in recent stages.

Second, because of the low stockpiling years ago, weaving enterprises have the motivation to purchase raw materials. A few years ago, Xiaobian interviewed some of the heads of weaving enterprises. In addition to the small part of the textile workers who received soft hands in 2019, most of the enterprises chose to store their raw materials for 15-30 days before the new year. Because stocks are few, the number of raw materials needed to purchase is more frequent, which has promoted the production and marketing.

Third, the quantity of raw materials purchased is not large. Weaving enterprises themselves need to buy raw materials, and see that the price of raw materials has increased. It may be because the price increase will buy 7-15 days more than usual, but it will not keep up two or three months' raw materials as seen in the past few years. This has led to the recent surge of production and sales of over 200% in the past years.

Finally, market confidence is still insufficient. The outbreak of foreign epidemic caused the textile enterprises to have a very big uncertainty about the future foreign trade market. The poor market situation caused by overcapacity last year also reduced the textile people's confidence in the continuous rising of raw materials, so there would be no mentality of "buying or earning" in the past.

To sum up the above reasons, Xiaobian listed a recent situation of polyester enterprises and weaving enterprises and possible future problems, hoping to bring some help to you.

Editor's note

Polyester factories want to go stock, but weaving enterprises believe that raw material prices will not continue to rise, so they do not want to buy more. In the future market uncertainty, textile people are more willing to hold money in their hands rather than buying raw materials.

Because there is no way to make too much effort in the "open flow", polyester enterprises now focus on the "stock source", and Xiaobian expects that the future polyester plant's capacity may not increase significantly before the stock of polyester filament drops significantly.

In terms of price, if the raw material of the upstream is down and the downstream weaving enterprises are unwilling to buy it, polyester filament will probably maintain a situation of "falling more or less".