The market has changed so quickly recently that it’s staggering! You thought it was going to fall again, but you never thought it would reverse so suddenly! Since the 18th, commodities have generally rebounded, with more than 50 varieties rising, including textile raw materials such as cotton, PTA, ethylene glycol, staple fiber and cotton spinning, which have experienced large increases!
Textile raw materials, which have fallen for nearly a month, have finally rebounded! The downstream polyester market is also ready to move, and production and sales suddenly exceed 100! Could it be that the market has been holding back for so long and the legendary retaliatory demand is coming?
Emotions and events
Bulk textile raw materials may just have fallen too much
In the view of industry analysts, the market’s current rebound is more a rebound caused by emotions and events, and is a recovery from the previous price drop. Because the short-term rise is too fast and too strong, the duration of the rise may be shorter than expected.
Taking cotton as an example, since cotton prices have reached 35% in this round of decline, when an oversold rebound occurs, the rebound will be very powerful. From a fundamental point of view, although the fundamentals of the cotton spinning industry are still weak, after continuous sharp declines, cotton valuations have reached a relatively low position, and the immediate processing profits of textile companies have been significantly restored. Cotton futures are far lower than the spot price, and more people leave the market with profits from short orders. At the same time, cotton-using companies will also buy cotton at a large discount and replenish goods through futures.
At the same time, cotton prices have been falling, which is not conducive to downstream stocking and production. The cotton spinning industry also needs stabilization of cotton prices to add a certain degree of confidence to the industry.
From the perspective of polyester raw materials, since these raw material futures have also experienced a month of decline and have fallen below the historical average, there is rebound momentum and demand to return to a reasonable range, and short-term raw material prices may usher in a phased bottom.
This time, commodities have rebounded across the board, and the short-term macro impact may have weakened. If raw material prices stabilize in the future, the performance of demand will be the key to the mid-term trend. However, although the data released by the United States over the weekend were better than expected, it does not mean that the inflation problem has been solved. The Fed’s pace of raising interest rates will not stop, and the contradictions in global economic problems have not been alleviated. After the end of this round of rebound, there is still a new round of opportunities to short commodities.
Upstream driving force weakens
Downstream containment of polyester is the key to the market
Judging from the rhythm of downstream procurement, I don’t know when it started. Even if the upstream raw materials have increased, the push for polyester has become less and less. It may be a little difficult for textile companies to stock up on goods this year. Polyester factories The only way to control inventory is through vigorous promotion. The good production and sales on weekends are partly driven by the preferential promotions carried out by polyester factories. At the same time, coupled with the strong increase in costs last Friday, we just caught the downstream mentality of “if you don’t buy today, you may not be able to reduce it” and removed some inventory.
This is enough to show that the downstream restrictions on the polyester filament market have made it unable to absorb the cost pressure. You can imagine that if a product cannot even absorb its own costs, the difficulties it faces may no longer be ordinary difficulties. And this is indeed the case. Looking at the current situation of downstream weaving, whether it is the operating rate, sales, or product prices, they have all encountered a “cold winter” market. The bargaining power of the weaving industry is no longer able to pass on the pressure from raw material costs. With the High-temperature production restrictions will increase, and the operating rate will further decrease in the off-season. Weaving manufacturers whose operating rate gradually decreases will inevitably have a simultaneous reduction in demand for various raw materials. Therefore, in this case, even if the polyester filament is driven by raw materials, its difficulty in rising is probably much greater than that of upstream raw materials.
Against the background of deteriorating macroeconomic expectations, global textile demand is expected to be difficult to pick up, and the mid- to long-term weakness will be difficult to change. At present, the sales and inventory pressure of upstream polyester factories in China are increasing; downstream demand continues to be weak. Although profits have been restored, the downstream willingness to restock is not strong. The Xinjiang cotton ban has made the already sluggish terminal demand worse. Therefore, the current rebound is only a correction of the previous excessive decline. If there is no substantial benefit in the market, the height of the futures rebound may be limited, and the futures may still maintain a weak operation after the rebound.
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