Who Is Willing To Reduce The Market Area!

Recently, for textile people, the biggest news should be polyester production reduction and promotion. 13 polyester factories announced their plans to cut production lines, involving a production capacity of nearly 3 million tons, causing a stir in the market.

　　 At the same time of announcing the production reduction plan, polyester factories also launched extra large-scale promotion measures, some polyester factories even reached 500 yuan / ton, which can be said to be unprecedented.

Polyester enterprises driven crazy by inventory and profit

In the final analysis, the reason for such a large-scale production reduction and large-scale sales promotion is that the inventory is too high. According to the statistical data of China silk capital network, the overall inventory of polyester market is now concentrated in 27-36 days; in terms of specific products, POY inventory is up to 8-13 days, FDY inventory is around 19-26 days, and DTY inventory is about 27-38 days.

Such inventory has been close to the year's high, and is still in the process of growing.

　　 According to the calculation, the current loss of POY is more than 200 yuan / ton, and that of FDY is more than 350 yuan / ton. The profit level of DTY is relatively stable, with a surplus of 100 yuan / ton.

　　 Production reduction is not strong, polyester factory promotion did not continue to pay, the market is worried about the possibility of large-scale production reduction in the future

However, even with the reduction of production and promotion, it is still difficult to see a significant improvement in production and sales in the first half of the year. The incident only led to the recovery of the polyester filament Market in Jiangsu and Zhejiang on July 8, with the average production and sales of mainstream large factories at 130% - 150%. And then although polyester production and marketing has been greatly improved, but still difficult to return to the previous grand occasion.

Why is the promotion of polyester filament "not fragrant"? The reason is also very simple: inventory is increasing, but the demand has not seen much improvement. Many weaving enterprises can not bear the dual pressure of inventory and capital, and began to reduce production. At present, the starting rate of water jet loom in Jiangsu and Zhejiang market has dropped to about 60%.

Weaving enterprises have fewer machines, and they have no extra funds. Naturally, they have no desire to buy silk. At this time, it is normal for polyester production and marketing not to go up. For polyester filament, at present, weaving manufacturers have entered the traditional off-season, and this year is a special period, and the off-season is even lighter. At present, the stock of grey fabric has risen to about 44 days. Most weaving manufacturers have plans to reduce production in the later stage, so the starting rate will be further reduced, and the demand for raw polyester will naturally decrease. At the same time, polyester factory inventory has risen to about 34 days, has been in the cumulative inventory state, coupled with the weakening demand, polyester prices are difficult to stabilize.

On the other hand, Cao Qing, senior analyst of BOC International Futures energy and Chemical Co., Ltd., believes that at present, the production reduction rate of polyester enterprises is not large. In addition to the 13 planned production reductions in July, the cumulative production capacity of polyester enterprises has been reduced by 2.937 million tons / year. Excluding routine maintenance, the production capacity is reduced by 1.544 million tons / year. The current situation of polyester market is more pessimistic, because she believes that the main concern of the market is the follow-up.

According to the plan released at present, due to the relatively large inventory pressure of filament, the production reduction is mainly concentrated in the filament link. Since July, POY and FDY have shown a loss state. "As far as we know, factories with reduced production are also concentrated on these two varieties. Staple fiber and bottle chip factories will have a preference for profitability Cao Qing told reporters.

Cao Qing believes that speculation is also one of the reasons for the current situation. In April, the crude oil price hit the bottom and picked up. The low price mentality in the industry made the polyester industry start high. Polyester factories and weaving factories have accumulated some stocks. At present, the crude oil price is flat, the speculative demand is reduced, and the inventory of polyester factories is greatly increased. According to the data of China fiber web, the stock of raw materials for weaving was only about 10 days in January, and has increased significantly since April, and has now risen to about 30 days.

"According to the communication with several large polyester enterprises, the pressure of the industry is not too big at present. At the beginning, a small loss is tolerable for large companies. However, the cash flow pressure faced by small factories is relatively large, and they will take the lead in reducing production. At present, the industry generally reflects that the pressure on the end weaving link is too high, and they are not willing to accept the goods. " Cao Qing said.

No one is willing to be a "catcher"! Limited production makes polyester raw materials worse

And as the upstream of polyester, the production limit news can be described as "icing on the cake" for PTA and glycol.

　　 "13 polyester enterprises will reduce the burden and pressure, mainly due to the loss of polyester factories. The period of production reduction basically started in the first ten days of July, but the end period is uncertain for the moment, which shows that the market still holds short expectations for the later period, and there is no sign of improvement Zhang Xiao believes that the joint production restriction covers filament, staple fiber and chip, basically covering the main downstream products of polyester.

And from Friday's Polyester upstream PTA and glycol spot and futures market trend is not difficult to see, the mentality of the entire industry chain is relatively pessimistic, it is difficult to reverse in the short term.

Entering 2020, PTA market will open a downward channel. In particular, under the influence of the global new crown pneumonia pandemic and the suspension of production in various countries, crude oil prices fell precipitously, and PTA continued to decline due to its drag. In addition, domestic transportation was limited and demand was insufficient due to the epidemic situation. PTA inventory was greatly accumulated, which started the plummeting mode and repeatedly set new lows.

In late April, PTA broke the historical low price. After that, with the gradual improvement of the epidemic situation, crude oil prices rose and PTA began to rebound slightly. However, due to the weak supply and demand fundamentals and insufficient upward power, the rebound range was limited.

"For polyester factories, under the current predicament, the contradiction can only be alleviated by limiting production. At present, the impact of production restriction is not significant. If we continue to expand the production restriction in the future, and the start-up has a greater decline, the contradiction between supply and demand of polyester will be transferred to PTA and glycol to a certain extent Cao Qing said that for PTA and glycol production enterprises, when there is oversupply and sales are blocked, it is a good way to sell through the futures market. "This year is so difficult, most of the profits of the industrial chain are still concentrated in PTA. I think in addition to PTA's own oligopoly competition pattern, it also has a certain relationship with the help of PTA futures market to enterprises. " Cao Qing said.

Zhang Xiao believes that PTA and ethylene glycol due to poor downstream market demand and their own fundamental accumulation of reasons, leading to a sharp decline in the futures and spot markets. This week, due to the commissioning of Hengli Petrochemical No.5 unit and the restart of Xinjiang Zhongtai Petrochemical Company, PTA operating rate remained at 90.07%, which was the highest operating level in the year. PTA unit is expected to stay in the downstream for a long time, but the basic maintenance cost of PTA is still lower than 700 yuan in the short term. Ethylene glycol continued to rise in port stocks this week is another reason for the price decline.

According to statistics, as of Friday, ethylene glycol port inventory rose to 1422100 tons, an increase of 5.73% over last Friday. However, the overall atmosphere of downstream polyester market is relatively weak, and it is difficult to effectively improve in the short term, so the overall idea is mainly short.