2020 Polyester Staple Semi Annual Report: Frequent Testimony History, Polyester Staple Fell To Historical Lows

2020 can be regarded as a special year. China's polyester staple industry is facing multiple difficulties in the first half of this year. Crude oil prices continue to record a new low. The export orders for domestic terminal textiles and clothing have also suffered a heavy setback after the spread of overseas diseases. When most industries are hit, polyester staple fiber can stand out, both in terms of profits and output. However, with the gradual weakening of the weak pattern of supply and demand, the profitability of polyester staple enterprises in the second half of the year is still difficult to maintain.

First, low oil prices and public health incidents spread. The price of PET staple fiber has been low in the first half of this year.

With the continuous spread of low oil prices and public health incidents, the market price of polyester staple fiber has not yet been refreshed. However, at the same time, the terminal enterprises began to reduce production in the situation of slow recovery of domestic trade orders and severe shrinkage of foreign trade orders. As a derivative of oil, the market of polyester staple fiber is also doomed.

In the first half of the year, the market price of PET staple fell from the high point of 7000 yuan / ton in January, and gradually hit the bottom of 5300 yuan / ton at the end of March, and the price has been refreshed for ten years. In the first half of the year, the average price of the East China market was 6134 yuan / ton, down 27.35% compared with the same period last year.

Specifically, the 1 quarter of the polyester fiber market showed a weak decline in the pattern, the market price decline in January is mainly due to the factory in order to avoid the cumulative accumulation of the Spring Festival holiday and the early reduction of shipment. In February and March, market prices were mainly caused by the sluggish demand of various links in the industrial chain caused by public health emergencies, and the market prices continued to decline along with the collapse of oil prices. By the end of March, market prices began to gradually hit bottom.

In the 2 quarter, the market of polyester staple fiber showed a trend of first and then suppressed. In April, the market trend was relatively special. The main reason is that oil prices began to rebound at the beginning of April because of the expected oil price reduction agreement. At the same time, the low price of polyester staple fiber once again refreshed the low level, which also attracted some of the bottom line funds to intervene in stockpiling, and the stocks of polyester staple fiber decreased rapidly. At the same time, the epidemic situation began to wreak havoc and caused the shortage and rising of the epidemic prevention materials. The surge in sales began to drive up the price of the whole staple market. But with the sharp drop in the situation of the sale of non-woven staple and the panic effect caused by the 05 contract of the US oil futures contract, the market began to return to reason and turn weak in late June. In the 5-6 month, the market maintained the interval shock market. During this stage, the oil price was relatively stable due to the extension of the production agreement and the recovery of demand. However, the control of the overseas epidemic situation was different, and the foreign trade market was still sluggish. The domestic market also improved slightly. The price of polyester staple market in this stage did not fluctuate significantly, but because the price was still at a low historical level, the overall sales situation was still acceptable. The profit margins of enterprises are also more optimistic.

Fig. 1 price chart of polyester staple fiber

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Source: lung Chung

Two, from loss to profit, the first half of polyester staple "gorgeous turn"

Although the polyester market is running very weak this year, especially the filament products are lingering around the profit and loss line for a long time, the profitability of the staple fiber industry is relatively acceptable. From the beginning of the year to the 4-5 month's profits, the polyester staple fiber has been turned magnificently. In the first half of 2020, the average profit of PET staple was 468.79 yuan / ton, an increase of 493.41% over the same period, up 35.52% from the same period last year. One of the main factors that led to the sharp rise in industry profits is the low aggregate cost resulting from the continuous decline of oil prices, the obvious advantage of the price of polyester staple fibers, and thus forcing the regeneration of staple fibres to continue to sell the market share. Two, because the staple fiber prices are at an absolute low level in history, the demand for staged speculation is much higher, which helps enterprises to lower their inventories, so that the price resistance is higher than other products.

In addition, the other reason leading to better sales and higher profits is that the price of polyester staple fiber is at an absolute low level, attracting more middlemen and social capital. It is a wave of market driven by Acupuncture and Spunlaced Nonwovens in April, which boosts the large scale inventory of production enterprises.

Fig. 2 profit comparison chart of polyester staple fiber

Source: lung Chung

Three, the supply has increased substantially, but the inventory of the enterprises has been maintained well.

Thanks to the good profitability, the production of polyester staple fiber enterprises is relatively high. In the first half of 2020, the production of polyester staple fiber was 3 million 11 thousand and 200 tons, up 2.10% over the same period last year. At the same time, the inventory level of enterprises is well controlled. In addition to the high inventory level in the 1 quarter, the inventory in the 2 quarter has remained at a low level.

Fig. 3 Comparison of polyester staple fiber output

Source: lung Chung

Specifically, in the early part of the year, affected by the epidemic situation, the polyester fiber market in the 1 quarter was also in dire straits as other polyester products, and the industry started even far below other products. However, after the end of March, the emergence of the bottom market made the polyester staple fiber gradually go to stock, and the market driven by non-woven fabrics in April promoted the rapid inventory of the enterprises, and even once was oversold. Driving industry to start up rapidly. At present, the production of polyester staple fiber has increased substantially over the past year. Due to the low inventory and high profit, the production enthusiasm of the enterprises is relatively high. Besides the devices such as Shandong's Wan Jie, Weifang Huahong, Jiangyin Changsheng long stop devices, and some parts in repair or transformation, other enterprises are basically at full load.

Table 12020 restart of polyester staple fiber enterprises in the first half of the year / Production summary

Unit: 10000 tons

Source: lung Chung

Fig. 4 Comparison of stock trend of polyester staple fiber

Source: lung Chung

Four, conventional demand is flat, and both domestic and foreign markets are under pressure.

Generally speaking, the spinning and weaving industry occupies more than 75% of the polyester staple consumer market. Influenced by public health events, China's terminal textile and apparel sales are flagging. Meanwhile, foreign trade orders have also shrunk dramatically. The demand for yarn industry in the first half of this year has been weak, and the level of start-up has continued to be low.

Fig. 5 Comparison Chart of operating rate of downstream yarn and cotton spinning machine

Source: lung Chung

In addition, affected by the epidemic at home and abroad, the foreign trade market of China's polyester staple fiber was very weak in the first half of the year. According to customs data statistics, China's PET staple fiber exported 285 thousand and 400 tons in 1-5 months, down 30.41% compared with the same period last year. In particular, the number of exports in 4-5 months is not as high as half of the same period in the previous year.

Specifically, in January and March, the export volume of polyester staple fiber decreased less than that of the same period last year. Exports in February, April and May declined significantly compared with the same period in previous years. The exports of polyester staple fibers in February fell 51.02% in the same period last year, mainly due to the blocked exports of domestic public health events. However, after the improvement of the domestic epidemic situation, some of the pre export foreign trade concentrated shipments resulted in total export volume. But in April, the export volume of China's staple fiber dropped by 48.54% compared with the same period last year, and 57.11% in May.

Fig. 6 Comparison Chart of polyester staple fiber export volume

Source: Customs Data

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Five, outlook for the future

In the second half of the year, it is believed that, along with the substantial increase in supply and the weakness of demand, it is expected that the supply and demand of goods will gradually become more prominent in the second half of the year. But considering that the price of oil has steadily recovered from the low level, the cost side will have some support. It is expected that the cash flow level of the polyester industry will gradually be closed in the second half of the year under the background of supply and demand contradiction and cost recovery. The main factors that affect the price change are gradually reduced to cost demand.

1, for more needs less, in the second half of the year, polyester staple fiber still faces a certain storehouse pressure.

Although the stock of staple fiber staple in the first half of the year is at a relatively low level, there are several sets of devices in the market at the end of last year, which will be put into operation and restart again. In the second half of the year, there will still be 200 thousand tons / year production capacity. The downstream cotton mill's performance is still weak. In the background that export orders are not as well as expected, and the domestic market is relatively dull, the pressure of future polyester fiber supply will gradually increase.

Table 2 new commissioning project of polyester staple in the second half of the year

Unit: 10000 tons

Source: lung Chung

2, overseas epidemic control varies, and foreign trade orders need to resume.

Many overseas countries have seen repeated outbreaks. The industry is still worried about the recovery of the foreign trade market. As a big exporter of textiles and clothing, China's foreign trade market has a major impact on the domestic market. At present, market confidence is generally weak. In the second half of the year, foreign trade orders for polyester staple fiber and its downstream spinning industry are still hard to recover quickly.

3, cost support or relatively robust, the second half of polyester staple fiber profit space or compression.

In the second half of the year, the darkest time in the oil market has passed. The price or the steady uplift will support the formation of PTA and ethylene glycol for polyester raw materials. While PTA shows that there is still a certain amount of compression space for the processing fee space under the background of strong and weak supply, but the PX continues to suffer losses in the near future. There is a certain possibility to repair the space for the non processing fee. The later PTA has relatively limited space to float down and the accompanying stone. The price of oil will rise and the price of PTA will also increase gradually. The price of ethylene glycol will also increase gradually under the support of oil prices. In a comprehensive way, cost support is expected to show a strong trend, but the downstream market is difficult to recover quickly. The profitability of polyester staple enterprises will continue to be compressed under the pressure of storehouse pressure.

Figure 72020 price forecast of polyester staple in the second half of the year

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Source: lung Chung

To sum up, long Zhong information believes that in the second half of the year, the market trend of polyester staple fiber is showing a trend of first inhibition and back Yang, and the market price will gradually hit bottom in mid and late 7, or the bottom price will be at 5300 yuan / ton line. After August, the market or accompanying the rise of oil and cost and the recovery of domestic and international market demand will show a slight upward trend.