Organization Forecast: Polyester Price Will Maintain At 800-900 USD / T Next Year

Can such order transfer tide become the turning point of China's textile industry and polyester industry? ICIS believes that as the global epidemic continues, textile and clothing consumption has fallen sharply, and the medium and long-term prosperity of the textile industry is expected to remain low, and polyester raw materials are under continuous pressure.

As the world's leading textile and garment exporter, China's economy has recovered rapidly after the domestic epidemic situation has been controlled. China has assumed the role of global textile products "supplier".

According to the data of the General Administration of customs, China's textile exports have continued to grow positively since August, and achieved an 18% growth rate in September. However, domestic textile sales account for about 75% of China's textile and garment output value. Even if the export recovery, the performance of the textile industry is still low in the case of weak domestic demand.

At present, the cumulative value-added of China's textile industry continues to grow negatively year-on-year. The inventory of textile products is still growing at a high speed, and the proportion of finished goods inventory in the total inventory continues to exceed 50%. In the past, the average was only 40% - 45%.

It can be seen that China's textile industry is still facing greater inventory and capital pressure, and the trend of de stocking cycle has not come.

Source: CEIC

The last round of Indian textile order transfer tide for the second time. The transfer wave began to take shape in mid September. The textile industry began to prepare goods. After the national day of the 11th National Day, orders increased significantly, which once caused the market to grab goods. Therefore, the price of single ton polyester increased about 400 yuan in half a month. However, the long-term rise in polyester prices is still limited.

The reason is that the main products returned from textile orders in Southeast Asia, such as India, are cotton textiles rather than polyester products.

According to the survey, most enterprises in Jiangsu, Shandong, Guangdong and other textile and garment production bases have significantly improved compared with the first half of the year, and some enterprises' orders have increased sharply.

Some manufacturers in Shengze District of Jiangsu Province said that due to the epidemic situation, some Indian textile orders were indeed transferred to China, mainly home textile orders such as towels and bed sheets. From Keqiao Textile Business index, we can see that since September, there has been a significant scissors gap between the prosperity index of polyester fabric and that of pure cotton fabric, and the prosperity degree of polyester fabric is still weak.

Source: China Keqiao Textile index

In addition, since August, the marginal impact of India's epidemic on India's economy has gradually weakened. With the resumption of work and production, textile orders transferred to China may be limited. From the perspective of India's manufacturing PMI, it recovered to above 50 in August and to 56.8 in September.

Although Google's data has not recovered to India before, it can also be seen that the mobile data has not recovered to India. This can also be proved from the export data to the United States. Therefore, on the whole, India's manufacturing industry is in the process of accelerating recovery, and the textile orders transferred to China in the later stage have limited sustainability.

According to the news in Shengze area, the transaction growth of fabric market has slowed down. Although manufacturers have more orders in hand, the speed of de stocking is slow. At present, the inventory in Shengze is about 40 days, and the start-up rate continues to maintain at a high level of 80-90%. At the same time, the recovery of foreign trade market is not as good as expected, and the market confidence has also dropped slightly. Textile enterprises also have certain concerns. Therefore, we adopt the business strategy of more market-oriented atmosphere and production according to order for raw material procurement.

Therefore, the supply pressure of polyester filament continues to be high. Polyester filament began in mid October. With the beginning of the replenishment cycle, the inventory of polyester filament did decline, but it dropped from the highest 31.5 days to 23 days, then stopped abruptly and began to rise again.

At present, the stock of polyester filament is 25 days, which is still at the highest level since records were made in 2015. At the same time, due to the high prosperity of polyester industry in the past two years, leading polyester enterprises have already planned to build new production capacity, and this year will be the peak of production.

According to market information, there will still be about 1 million tons / year of polyester filament production capacity ready to be put into operation in 2020, and ICIS predicts that polyester filament inventory will continue to rise by the end of the year.

Source: ICIS Price Forecast Report

In the short term, although the current market price of polyester filament has fallen, the overall performance is still strong under the support of favorable terminal demand. In November, it is mainly the "double 11" clothing and home textile e-commerce preparation, followed by the "double 12" arrival, or will usher in a wave of replenishment, the order volume is still likely to rise.

In addition, with the decrease of temperature and the demand for cold proof clothing fabrics, the market atmosphere for goods will be driven, and the price will rise at that time. However, the supply pressure of raw material market will remain, and the cost side support is insufficient, so the overall price increase will not be too large.

From the middle and late ten days, with the advent of the off-season procurement, the price will also weaken, and the future market still needs to pay attention to the raw material market and foreign trade situation.

At the same time, looking forward to 2021, according to ICIS supply and demand database, China's effective polyester production capacity will grow by about 5.5%. However, with the repeated epidemic situation, it is expected that clothing consumption will not improve next year, and the polyester industry may still be in surplus next year.

In addition, the upstream raw materials are also in the peak period of production. The effective capacity growth rate of PX, PTA and glycol in next year will be as high as 11%, 16% and 17%, respectively. The supply pressure is also large, so the cost side is difficult to support polyester.

Therefore, in the case of weak global textile and clothing demand and the continuous release of production capacity in the whole industrial chain, ICIS expects that polyester prices will continue to stay at the low level of 800-900 US dollars / ton next year.