"Golden March" Changed To "Black March", And All Aspects Of The Polyester Industry Chain Reached A New Low.

Although the US and European stock markets have stabilized in recent days or even rebounded slightly, the trend of international oil prices is still not optimistic. On the 30 th of March, the US oil even fell below 20 US dollars per barrel, the lowest level in 18 years. At present, the epidemic situation outside the country is becoming increasingly grim. The market's worries about the demand side of crude oil are beginning to heat up. Meanwhile, the oil price war in Saudi Arabia and Russia has not yet subsided. It is the sharp fall in crude oil that leads to the lack of cost support in polyester industry, and the price of polyester raw materials and polyester has also hit a new low.

Polyester raw materials inventory high, new low price

In the environment of supply and demand, the domestic polyester industry is also facing the pattern of supply and demand. From the current inventory of polyester raw materials, they are at an absolute high level. At the end of March, domestic PX social stocks rose to 2 million 200 thousand tons, a high level since September 2017. PTA social inventories will climb to 3 million 100 thousand tons, and record a new high. The main port stocks of ethylene glycol are expected to increase to 1 million 110 thousand tons, close to 2019's high level. At this stage, the polyester industry is facing not only the high pressure of raw materials inventory, but also the difficulty of diverting high inventory to downstream.

At present, the pressure on the terminal weaving industry comes from inadequate domestic sales and export reduction. The demand for the polyester industry has been slow to recover. The black swan event superimposed on the crude oil aggravated market wait-and-see sentiment and further slowed down the speed of finished product inventory transfer in various links, so that the inventory of grey fabric reached a 43.5 day high inventory level. It can be seen that the whole polyester industry is in a storehouse cycle.

Under the influence of high inventory, polyester raw materials have broken through the historical low of 2008. As of March 30, 2020, the price of PX was 466 US dollars / ton, which was 18.96% lower than before 2008. The PTA price in the East China market was 3080 yuan / ton, 27.53% lower than before 2008. The new price of MEG in Zhangjiagang petrochemical company was 2948 yuan / ton, which was 16.96% lower than before 2008. It can be seen that the decline in this round is more rapid than in 2008. The first reason is that the cost of crude oil is broken down, and that the cost of polyester raw materials is lower. The other reason is the concentrated release of new production capacity, especially the integration of refining and chemical industry and the matching of its production capacity. The supply of polyester raw materials has increased rapidly since the second half of 2019.

Foreign trade orders stagnate

Despite the orderly progress of domestic resumption, the current demand for foreign trade is experiencing two shocks. For the first time, affected by the domestic epidemic, the resumption of downstream jobs has been postponed for one month, resulting in the cancellation of part of the single delivery delay. The second time, after mid March, the overseas epidemic spread rapidly, and the foreign orders were cancelled or delayed again. Overseas consumption is stagnant, brand clothing has been shut down, orders have shrunk, and Shanghai has been closed to foreign countries or cities.

From the export data, 1-2 months because of the domestic epidemic can not be normal delivery, coupled with the cancellation of some orders, resulting in a significant decline in exports of 20%, 3-4 months, the spread of overseas epidemic, consumption decline, coupled with foreign businesses unable to receive normal, export growth is expected to continue to explore (see 3-4 months outside the single cancellation or delay ratio of 30-50%).

"Price increase" has little effect, reducing production and reducing negative burden is the last resort.

A large number of export orders cancelled or postponed delivery, and the impact of shrinking domestic orders, weaving fabric can not be shipped, grey fabric inventory once again turned upward (warp knitting stock in more than 20 days, spray weaving library for more than 40 days), a small number of weaving enterprises began to sell at a low price, the overall mentality of the downstream market panic. In recent years, polyester factories began to turn quickly to beat prices from the original price decline. Polyester filament fell more than 20% in the past two weeks. At present, the filament has reached the cost line, and FDY has even fallen into losses. But even with such a big reduction in sales promotion, the terminal panic is still hard to dissipate. There are only a few people who collect and store goods. The daily production and marketing is only about 50%, and the polyester filament factory with high inventory is facing the pressure of reducing production. In terms of terminal, starting from last week, looms and weaving are starting to face two callbacks. The time of starting down will be more than 20% in the late March and early April. The coming Qingming holidays will probably drop more.

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Where is the bottom of the market and when will the bottom be hunters?

Under the shadow of the empty sentiment, the current polyester market is still in the process of decline. After breaking through the low level, we are looking for new supporting positions. Overall, the polyester industry in March could be seen as a follow-up to the collapse of oil slump caused by the collapse of crude oil, while there is a negative impact of the exacerbation of the spread of public health events overseas. In order to explore the procurement node and cycle of polyester industry, we must start from two aspects: first, the demand side will pick up, and the two is the end of the cost side.

From the demand side, although the domestic polyester industry has been resumed, the terminal inventory is still difficult to digest in the short term, and the influence of terminal foreign trade orders also weakens the demand of polyester industry to a certain extent. Moreover, the cost side did not appear to stop signal, the market stocking cycle has narrowed. It can be seen that under the premise of turning point of demand in the polyester industry or relying on the inflection point at the cost end, the weight of the cost will have a greater impact on the weight of the polyester industry. Because of the multiple uncertainties in the current crude oil market, including the compromise of the price war, the follow-up stimulus policy of the global central bank and the turning point of the overseas epidemic, it is predicted that the low price high volatility of short-term crude oil will begin to normalize. In the long run this year, the cost factor will be the core driver of the pricing of polyester industry. The international oil price fluctuation range may be 20-25 US dollars / barrel in the future.