Cost pressure has increased sharply, and downstream companies are saying that they “cannot afford to be hurt”. How to “overcome difficulties”, polyester companies can no longer sit still. “Reporting to a group to keep warm” may be the best solution at the moment.
Let’s discuss countermeasures to “overcome difficulties”, polyester may face “limited production and guaranteed price”
Market news last week said that many companies in the polyester industry will meet to discuss countermeasures on the supply side. A reporter from Futures Daily also confirmed from various sources in the market that in order to cope with the high prices of raw materials, some major polyester manufacturers will discuss countermeasures last Friday and Saturday.
According to market insiders, the discussions this time are mainly focused on large-scale filament factories. Currently, the average inventory of filament companies exceeds 30 days. After summer, the market enters the industry’s traditional off-season, and polyester factories will face increasing inventory pressure.
“Recently, PTA prices have continued to rise, and polyester production and sales have improved in stages, but it has failed to form a trend of depleting polyester inventories.” Chen Sheng, PTA analyst at Guomao Futures, told the Futures Daily reporter that the continued losses of filament yarns have had a negative impact on the factory. Operational pressure. Downstream orders are sluggish, and it is difficult for polyester products to form a healthy price increase and destocking. The periodic improvement in production and sales is just a transfer of inventory and has not been digested by the terminal. It’s summer, but the textile industry is facing a cold winter.
During the interview, the reporter learned that it has become normal for polyester factories to hold meetings to discuss industry countermeasures.
Generally, when conflicts between upstream and downstream industries intensify and certain risk factors exist in the later stage, manufacturers jointly discuss the next step of production and sales strategies and reasonably control corporate risks.
“Enterprises often choose to encourage downstream purchases through joint supply-side production reductions or price reduction promotions when inventories are high and losses are large, reducing inventory pressure in the polyester industry and making their own industries more benign.” Tianfeng Futures analyst Liu Siqi said that the previous joint production reduction and promotion had a certain effect. The joint production reduction eased the supply pressure, and the promotion increased the enthusiasm for stocking of weaving raw materials, and the polyester inventory has been alleviated to a certain extent.
The reporter learned that the background of this meeting was different from the past. In the past, polyester factories mainly dealt with the problem of high inventory. However, currently, polyester factories are also suffering from a sharp increase in raw material prices, and the factory’s cash flow has been severely tested.
According to market participants, at present, the price of PTA raw materials remains high, and it is urgent for polyester production companies to reduce the load and digest the existing inventory.
“After the Spring Festival, polyester and polyester stocks continued to rise. There was a brief decline before May Day, and then rose again. Although the load of the polyester device has dropped to a low level, the inventory is still at a high level.” Analyst at SDIC Essence Futures Pang Chunyan said.
“Currently, the inventory of the entire polyester chain is at a high level. Yarn companies are experiencing production losses and cash flow losses are around -200 yuan/ton. Although the rise in raw material prices has driven some speculative demand, the inventory of yarn factories for nearly a month has been Overdraw the market demand in advance. Textile export orders have been transferred outwards, domestic demand has not yet recovered, market outlook orders are in doubt, and the continued accumulation of inventory has formed a ‘barrier lake’.” Chen Sheng said.
It is understood that the profits of the polyester industry chain are concentrated in the upstream PX link. PTA, polyester, and weaving links generally suffer losses, and factories are passively reducing their workload and increasing maintenance.
“Due to the price increase of PX, the processing fee of domestic PTA has been significantly compressed. The spot processing fee of PTA has been less than 200 yuan/ton. The extremely low processing fee has caused some PTA manufacturers that have completed technical transformation to still be unwilling to start production. , the load of domestic PTA equipment is low. The operating conditions of polyester factories are divided, with high profit and high start-up of bottle flakes; average short fiber inventory, low profits; but large filament inventory, continuous cash flow losses. And the terminal currently accepts a lack of orders, It’s difficult to raise prices,” Chen Sheng said.
In Liu Siqi’s view, in the first half of the year, the polyester market has maintained a pattern of “strong upwards and weak downwards”. Raw materials have surged recently, and demand-side drivers are insufficient to drive prices. Prices have been limited to follow up, and profits have been compressed again. The overall load of polyester and weaving is not high, and polyester factories are willing to protect prices by ‘limiting production’. “Liu Siqi said.
In fact, in recent years, the production capacity concentration of polyester filament has increased significantly, and the geographical distribution has also become more concentrated. When the market is poor, companies have also taken the initiative to reduce production. The effect depends on the upstream and downstream supply and demand. Matching degree.
According to Pang Chunyan, when PTA prices rose rapidly in 2018, downstream companies could not bear the rapid rise in PTA prices, and terminals cut production one after another. Before the National Day that year, the polyester operating rate dropped from a high of more than 95% to less than 80%. Afterwards, negative feedback from the industry chain caused PTA prices to fall from a high level in mid-October. “Last year, there were also cases where companies jointly reduced production, mainly due to high inventories and poor profits. Production reduction is conducive to alleviating the inventory pressure of companies.” Pang Chunyan said.
The superimposed costs of terminal consumption are rising, and downstream negative feedback is intensifying
It is worth mentioning that in the polyester industry chain, every time news of polyester factory negotiations is exposed, the downstream market usually reacts.
“Generally speaking, the purchasing in the downstream market the day before yesterday will usher in a phased purchasing boom due to the later meeting. But compared with the previous situation, after the news of this meeting broke out, on June 9, the downstream market of polyester generally The performance is average, with production and sales still maintaining 20-30%,” said Zhang Qiang, director of the editorial center of China Silk City Network.
</pUnder realistic circumstances, downstream companies can choose to appropriately reduce production based on their own losses and inventory conditions. Under realistic circumstances with strong costs, they can choose to stock up in advance appropriately at appropriate market points based on their own orders and sales.
“In the future, the way out for polyester downstream lies in waiting for the return of ‘autumn and winter’ order demand in the second half of the year. Only when terminal demand is boosted and the industry chain is smooth can profits be restored; on the other hand, the market continues to be low in profit, competition is intensifying, and high Under the cost, excess production capacity will be eliminated and the market will be restored to balance.” Liu Siqi said.
</p
