Since the beginning of 2022, crude oil has continued to rise. Recently, due to the escalation of the Russia-Ukraine dispute, frequent news and increased market operations, crude oil has exceeded “100 yuan”.
The current rebound in crude oil prices has given a major boost to the commodity market. As the source of the entire polyester industry chain, crude oil’s impact on market sentiment cannot be underestimated. Although crude oil has risen sharply, it seems that the polyester segment has become extremely “suffering”.
As crude oil prices rise, midstream and downstream costs are gradually pushed up. However, there is still no lack of promotions for polyester filament prices this week, and they have not risen with the rise in crude oil prices… Why is this?
Cost and demand game
Making the polyester industry extremely embarrassed
After the Spring Festival, upstream and downstream construction started to split again, and the imbalance between supply and demand made the polyester industry very embarrassed! As of last Friday, the comprehensive operating rate of domestic polyester was 89.19%, 5.27% higher than before the holiday. With the continuous opening of polyester factories, polyester production has increased significantly. In terms of polyester filament, the average operating capacity of enterprises is at 89.1%. Tiansheng, Xinxin, Shenjiu and other installations have restarted, and the overall operating capacity has increased significantly.
However, as the operating rate of polyester factories reaches a new high, the downstream operations and procurement are also worrying. Judging from the current polyester market, during the seasonal maintenance period around the Spring Festival this year, polyester factories did not have large-scale operations. The overall operating rate has been reduced, and the overall operating rate is higher than the same period in previous years. However, terminal weaving is on holiday as scheduled, which makes the post-holiday inventory pressure of polyester factories higher than in previous years. Coupled with the return from the holidays, polyester production and sales performance was slow, with average production and sales less than 50%, and polyester product inventories increased rapidly. It is understood that the inventory of FDY and DTY has been around 30 days, POY inventory has been around 25-26 days, and polyester short inventory has been around 14 days. The inventory of each product has refreshed the high point of last year.
Judging from the data, the recent wave of profit-sharing promotions for polyester yarns to stimulate consumption has not met expectations. The production and sales of some manufacturers are above flat, and most buyers are mainly for rigid needs. The exact reason is that after the Spring Festival, the terminal clothing industry placed fewer orders, and the construction starts in Jiangsu and Zhejiang did not show a rapid upward trend. In addition, due to the impact of the epidemic in the Shengze Textile Cluster, the overall demand was insufficient to follow up, and the actual transaction volume slowed down. Mainly consume the raw material inventory in the early stage. Textile enterprises mainly accept small and medium-sized orders considering the delivery date. A textile boss in the Shengze area said: “Recently, crude oil prices have been rising like crazy. At first, many raw material factories also followed suit. However, recently many prices have begun to fall. The main reason is that the market conditions are not good.”
When the market is bad, naturally fewer people buy silk. In previous years, it was always “buy when the price rises but not when the price falls”. However, when the price of polyester yarns actually increased, the textile boss’s response was “Whatever silk you buy, it will definitely fall after a while.” Yes, what kind of goods are there in this market now? Isn’t this pushing yourself into the fire? If there is an order, just buy a little and use it as you go.”
Supported by high prices, polyester products may remain strong
The node for purchasing raw materials for weaving factories has arrived
To sum up, under the pressure of high costs in the early stage, the terminal weaving link is still on the edge of profit and loss, so it mainly maintains early orders. In addition, poor orders are common due to the impact of the epidemic in Shengze area. With the correction of crude oil in the past few days, polyester filament yarns have recently started to take some promotional activities in order to reduce inventory. Weaving companies can get discounts when purchasing filament yarns depending on the purchase volume.
This phenomenon may be about to change. With crude oil rising to 100 yuan again since the 24th, the price of polyester filament will surely firm up due to cost support. It is understood that Ma Xiaowei, director of the National Health Commission, held a meeting on the 23rd. When talking about the epidemic situation in various places at the national epidemic prevention work video conference, he said that the epidemic situation in Suzhou was basically under control. It is believed that the Shengze textile market will also usher in recovery. It is expected that the acceptance of raw materials by downstream factories will gradually recover in the near future, and the arrival of the procurement node for downstream weaving enterprises in the traditional peak season of gold, silver, silver and gold at the end of the month will inevitably attract downstream purchases of raw materials and may stimulate the recovery of orders in the downstream market.
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