The impact of the Russia-Ukraine conflict continues to ferment, the energy crisis intensifies, oil prices take the lead, and market volatility intensifies.
On Tuesday, the United States announced a ban on energy imports from Russia. Affected by this, international oil prices surged sharply. As of the close, the April contract of NYMEX WTI crude oil futures rose by US$4.30/barrel, or 3.6%, to close at US$123.70/barrel; the May contract of ICE Brent crude oil futures rose by US$4.77/barrel, or 3.9%, to close at US$127.98. /bucket.
The most direct impact of the increase in crude oil on downstream chemicals is the increase in costs and the increase in the price center of the industrial chain. From the perspective of the polyester market, on the 7th, pure oil-based PTA performed the strongest, hitting the daily limit in the afternoon; ethylene glycol followed, with an increase of more than 5%, and the increase in downstream staple fibers lagged behind that of raw materials.
On Monday, PTA hit the daily limit many times and performed the strongest among the polyester sectors, mainly due to its strong fundamentals. At present, the entire industry chain shows that the closer to the upstream crude oil raw materials are, the stronger the performance is, and the closer to the consumer end, the weaker the performance is. Profits are concentrated in the upstream crude oil and naphtha sectors. PX, ethylene and downstream chemicals are in a comprehensive loss situation. The losses are intensifying with the strong rise in raw materials, and the profits of polyester products are also being squeezed. With the sharp increase in the price of raw materials and the increase in polyester varieties, the profits of various polyester varieties have been significantly compressed. Except for DTY, filament yarns all showed a loss of 200-400 yuan/ton, short fiber cash flow also fell into losses, and bottle flake cash flow was still able to maintain relatively high profits.
The rapid rise in raw materials suppressed demand, and downstream companies suffered serious losses.
The risk of parking and production reduction is increasing!
Excessive rise in raw material prices will inhibit demand and form a bottom-up negative feedback. From what we have learned so far, strong costs and weak demand have become important contradictions in the current polyester market. According to Dadi Futures analyst Jiang Shuopeng, after entering March, the performance of the downstream demand side of polyester is still relatively weak, weaker than expected. At present, terminal orders are still weak. There are only a small number of new domestic summer orders, large-volume orders have not been transmitted, and there is no obvious improvement in foreign orders.
Terminal product prices are relatively rigid, current order demand is weak, and downstream products are limited to follow up. As the price of raw materials increases, the profits of downstream products are compressed. After the company loses money, the production enthusiasm decreases, the terminal load decreases, and the demand for chemical raw materials decreases, thereby inhibiting Upstream price increases. The main risk gathered in the context of high oil prices is that downstream demand is insufficient to support high prices, forming a bottom-up negative feedback and triggering downward risks in the industrial chain.
For example, PTA and oil-based ethylene glycol have been in a state of loss recently, and maintenance plans in the industry have increased significantly recently. Oil prices are rising day by day, which has a more obvious impact on downstream production companies. The cost of raw materials is rising. If it cannot be smoothly transferred to the terminal, downstream production companies will suffer serious losses. They need to pay attention to risks such as downstream shutdowns and production reductions.
“Crude oil continues to break new highs, and international oil prices have exceeded 120 US dollars/barrel. High prices have brought increased volatility. Crude oil continued to rise on the 8th, but some polyester end units announced maintenance plans, and demand has limited support for high prices. PTA The basis has weakened slightly, and the trend oscillation is weak.” Liu Siqi, an analyst at Tianfeng Futures, said that the trend of PTA has continued to be weaker than that of crude oil recently. The main reason is the difference in the supply and demand patterns of crude oil and PTA. The problem of crude oil supply bottlenecks is difficult to effectively improve in the short term. , the conflict between Russia and Ukraine has intensified the contradiction of supply shortage, and PTA has entered a surplus cycle from 2020. New production capacity remains high and profits continue to be low to stimulate market supply and demand to clear. During this year’s sharp rise in crude oil, demand has been insufficient to follow up, and it has been relatively difficult to transfer PTA costs downstream, resulting in the current situation where crude oil continues to rise while PTA remains weak.
According to Zhai Qidi, the current demand situation in the polyester market has caused high crude oil prices to be blocked in the downward transmission, and downstream polyester has released a production reduction plan for the first time. Under high oil prices, terminal orders are average, and weaving companies mainly purchase urgent needs. Downstream polyester finished product inventories are under great pressure, and POY, FDY, polyester staple fiber, polyester chips and other varieties have recently suffered losses. Some polyester factories announced on Tuesday After announcing the maintenance plan in mid-to-late March, PTA has just faced peak pressure.
Once the terminal inventory pressure reaches the threshold
Enterprise “strike” will gradually increase!
In the future, Liu Siqi believes that the “slow peak season” situation may reappear, and the demand drive is insufficient. The rise of PTA and polyester downstream still depends on the rise of crude oil. Pay attention to the negative feedback of the terminal, and the subsequent trend may be weaker than that of crude oil.
“In the short term, polyester production reductions are mainly based on small-capacity installations, while large-capacity installations are still operating smoothly. It is expected that the polyester operating rate may peak in the near future, but the room for decline is limited. In addition, polyester production reductions will mainly be negative for the market mentality. Overall It seems that the prices of polyester industry chain varieties will fluctuate with crude oil in the near future, and considering the price transmission problem, it is expected to be significantly weaker than crude oil.” Zhai Qidi said.
From the perspective of the weaving market, the current oversupply situation is still prominent, and the high inventory situation of conventional fabrics is also serious. Compared with raw material inventory, the destocking pressure on gray fabrics is greater. Judging from the past two days, although we have entered the traditional peak season, weaving companies are currently sellingThe market is still difficult to open, and there are few products for sale, especially conventional fabrics such as polyester taffeta and pongee, which occupy a large market share, but sales are not as expected. As a result, the inventories of weaving enterprises have continued to rise, and in fact, raw material inventories have been transferred to weaving enterprises to some extent. This inventory pressure in the terminal market is probably more dangerous than inventory in polyester factories.
Once the terminal inventory pressure reaches the threshold and it is difficult to cope with the pressure of rising costs, the number of companies “on strike” in production will gradually increase!
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