[Introduction] Looking at the first half of 2022, turbulence in the external situation has pushed up the oil price bubble, and the domestic epidemic has repeatedly forced companies to reduce or suspend production. The polyester filament market is facing internal and external worries, and companies are in a difficult situation. Especially since May, polymerization costs have continued to rise, and polyester filament companies have continued to raise their quotations to repair costs. The cost benefits continue to ferment, and the upward trend continues to this day. In the short term, the polyester filament market will still passively follow the rise, and the market will open an upward channel.
Figure 1 Comparison of price and profit trends of mainstream polyester filament models from 2010 to 2022
Taking history as a mirror, we can see the ups and downs. Looking at the price trend of polyester filament in the past ten years or so, there have been three waves of rising prices during this period. First, from August to November 2010, driven by the national “four trillion investment” policy and the skyrocketing price of cotton, demand for polyester filament as a substitute was booming, and prices rose rapidly. Secondly, from June to mid-September 2018, with the recovery of terminal demand and the growth of textile exports, the price of polyester filament rose rapidly, and the refining and chemical integration projects were successively launched on the market, which gradually reduced the profits of the polyester industry chain from the raw material end. Moving to polyester varieties, polyester filament cash flow has been gradually restored. The third wave of increases occurred after the May Day holiday. Prices from crude oil to PTA, the main production raw material, continued to rise, and the polymerization cost basically remained above 7,000 yuan/ton. Under the dilemma of high cost and low demand, polyester filament manufacturers slowly followed the rise. , however, cash flow has been in a state of negative profitability for a long time, companies’ willingness to ship at low prices has weakened, and the market has accelerated its pace of upward adjustment.
Analysis of factors affecting polyester filament market in different periods
As shown in the table above, the main influencing factor for the price increase of polyester filament in 2010 and 2018 is the demand side. As mentioned above, the surge in cotton prices in 2010 caused a surge in demand for substitute chemical fibers, and polyester filament ushered in the first price increase in the past decade. The peak period of industry development. The main influencing factor for the price increase of polyester filament in 2022 is the cost side. The epidemic situation in many places in China at the end of the first quarter and the beginning of the second quarter is severe, domestic and foreign demand has dropped, and high costs have further suppressed terminal demand, and the operating rates of the downstream texturing and weaving industries have continued. On the eve of the Dragon Boat Festival holiday, the operating rate of chemical fiber weaving in Jiangsu and Zhejiang was less than 50%. At the same time, the inventory of the polyester filament industry also reached a historical peak in the past ten years.
Figure 2 Average inventory trend of polyester filament companies from 2010 to 2022
As shown in the figure above, the current average inventory of the polyester filament industry is around January, and the last time the average inventory of the industry exceeded one month was in mid-to-late September 2020. Due to the impact of dual control and power restriction policies, downstream texturing and weaving companies Large-scale parking has led to a surge in polyester filament inventory pressure. Looking back at history, although June is the traditional off-season for demand, in previous years the average inventory of polyester filament in early June was 15-20 days. However, the production and sales of polyester filament before and after the Dragon Boat Festival holiday this year showed a large volume, but it is still difficult to change the polyester filament demand. The dilemma of high inventory. As of the close of trading, the main raw material PTA continued to rise, and the current polymerization cost has risen to 8,045 yuan/ton (since November 7, 2018, the polymerization cost has been below 8,000 yuan/ton, and the average is around 6,000 yuan/ton) , and in the short term, demand support still exists, so PX will still maintain strong operation in the short term, while PTA cost support is strong, coupled with the current tight market supply, while the polyester industry is currently operating at more than 80%, and the PTA supply and demand situation is good. If there are no expectations for large-scale production cuts or load reductions in polyester plants, the PTA market will have strong positive support and will maintain a volatile upward pattern. The current situation of high cost and low demand in the polyester filament industry is difficult to alleviate, and continued cash flow losses have also caused companies to passively increase their quotations and gradually begin to restore cash flow. Cost-end support still exists, and polyester filament will be easy to rise but difficult to fall. The market may continue to fluctuate upward in June.
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