Interest rate hikes, strikes, production shutdowns…are happening again,
Market demand is sluggish and the economy is slowing down significantly!
The road to skyrocketing prices for commodities in 2022
Are you going to put the brakes on in June?
The largest amplitude in 28 years!
After raising interest rates by 75 basis points, the bulk began to “scorch green”!
On June 16, the United States announced another interest rate hike, raising the target range of the policy interest rate federal funds rate by 75 basis points, from 0.75%–1% to 1.5%–1.75%. This interest rate hike is the largest since 1994, and the commodity market will usher in another huge shock!
According to statistics, central banks in more than 20 countries have raised interest rates more than 60 times this year, and global inflation is becoming increasingly severe. Although the substantial interest rate hike in the United States this time has effectively alleviated inflation, it may accelerate the economic recession and have a strong inhibitory effect on the demand for global commodities. Combined with the situation between Russia and Ukraine and supply chain disruptions in Japan and South Korea, the rally in commodities may be capped.
After the U.S. announced an interest rate hike, most domestic futures commodities ended lower. Among them, PTA, which was popular in the early stage, fell even more sharply. By the 17th, it had basically given up its early gains, and the main contract had fallen below 7,000 yuan.
Downstream users are in high spirits
Polyester filament production and sales are stagnant, and news of “production reduction” in the market reappears
As PX and PTA opened a downward channel, polymerization costs dropped, and polyester filament cash flow recovered slightly. However, most models still failed to turn losses into profits. Downstream users are highly sentimental about selling, polyester filament production and sales are stagnant, and news of “production cuts” has reappeared in the market.
Judging from previous years, June is the traditional off-season for polyester filament demand, and the overall operating rate is at a relatively stable stage. However, in the second quarter of this year, the operating rate of polyester filament plummeted. The overall operating rate is currently around 73%, a year-on-year decrease of nearly 20 percentage points. .
At present, the operating rate of terminal weaving is less than 50%, and the average operating rate of the texturing industry is less than 60%. Compared with polyester filament, the operating rate of the downstream industry is low, and the contradiction between supply and demand is more prominent. “Reducing production” seems to be a strategy to protect prices. However, the start-up of the polyester filament industry is already at a low level at this stage, and long-term low-load operation increases the production costs of enterprises. In particular, leading companies mostly support upstream PTA devices, and the production reduction of polyester filament devices promotes It is difficult, so in the short term, the overall start-up of polyester filament in June will remain around 73%. As the temperature gradually rises and terminal orders are poor, the downstream weaving industry’s start-up inventory is expected to decline, and the supply of polyester filament may be reduced due to the mismatch between supply and demand.
Pay attention to market demand! Be wary of downside risks!
This year’s rise has begun to slow down, and some raw materials have recently seen a downward trend. Although high crude oil prices have provided support for bulk chemicals, rising costs have put pressure on downstream factories, and terminal demand is declining due to wars, epidemics, inflation and price increases. The current interest rate hike has a greater impact on the prices of oil and grease products. Oil products have already experienced their tenth round of increases, breaking through the 10 yuan mark; industrial industries such as construction and manufacturing have also slowed down. It is expected that as the substantial interest rate hikes continue, the era of “money is worthless” will become more and more obvious. Global demand will be suppressed in 2022, which will affect the trend of chemical bulk. You should pay more attention to the dynamics of market supply, demand, production and sales recently, and be wary of downside risks.
At present, raw materials have risen more than expected, and terminal demand has been weak. The increase cannot make up for downstream cost losses, and high price overdrafts are gradually “backlashing” the market.
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