Since November, polyester filament and polymerization costs have shown a double decline. However, overall, the decline in polyester filament cash flow is limited, and the current profit level is at a mid-to-high level for the year.
After the “Golden Nine and Silver Ten”, the price of polyester filament has been falling straight down, but it is still higher than the price in the same period from 2019 to 2020. Although the mainstream polyester filament production enterprises started the mode of limiting production and ensuring price at the end of November, the cost-side expectations have been weak recently. In addition, Repeated epidemics at home and abroad have aggravated market concerns. The shrinkage of supply is far less than the shrinkage of demand. The contradiction between supply and demand in the market still exists. At the end of November, polyester filament was offered discounts after production reduction, and the focus of market transactions shifted downward.
Figure 1 Comparison of price trends of mainstream domestic polyester filament models from 2018 to 2021
Source: Longzhong Information
Although polyester filament has shown a downward trend since November, the cash flow of polyester filament has not fluctuated significantly due to the simultaneous decrease in raw material prices. The average polymerization cost in November was 5,954 yuan/ton, a month-on-month decrease of 11.6%. As shown in the figure below, the cash flow of the three mainstream models of polyester filament fluctuated downwards in the first half of the year, and profits were compressed. At the end of the month, due to the expansion of the decline in raw materials, the cash flow of polyester filament increased slightly. .
Figure 2 Comparison of profits of three major domestic polyester filament models in 2021
Source: Longzhong Information
Overall, the average cash flow of POY mainstream models is 653.9 yuan/ton, the average cash flow of FDY mainstream models is 443.67 yuan/ton, and the average cash flow of DTY mainstream models is 559.09 yuan/ton. They all showed slight declines from the previous month, but the current profit level is nearly 5 higher levels in years. Especially since the outbreak of the epidemic in 2020, the cash flow of polyester filament has continued to be compressed. The cash flow of polyester filament has been near the break-even point for most of the year. However, the cash flow of polyester filament has been continuously restored since 2021. In March and October, the cash flow of polyester filament The flow exceeded “thousand” twice.
Statistical table of raw material supporting production capacity of Chinese polyester production enterprises (unit: 10,000 tons/year)
Source: Longzhong Information
In 2016, as the domestic and foreign economies gradually recovered, the demand from the terminal textile industry increased, and the demand for polyester also increased accordingly. The profits of the polyester filament industry chain continued to recover. On the other hand, in recent years, large-scale domestic refining and chemical projects have been put into production one after another, and the oversupply has led to a decrease in PTA prices. As shown in the figure below, the profits of the industrial chain have sunk to the polyester end, among which the cash flow of polyester filament has continued to improve. Therefore, from 2018 to 2021, domestic polyester filament yarn has also started a rapid expansion mode of production capacity.
Figure 3 Comparison of profits of various varieties in the polyester industry chain
Source: Longzhong Information
Production capacity is growing too fast, while demand growth is slowing down. The contradiction between supply and demand of polyester filament is highlighted, and companies are forced to frequently promote shipments. In recent years, the production and sales of polyester filament have shown a pulse pattern. However, as the frequency of promotions accelerates, the promotion effect is greatly reduced. Taking 2021 as an example, in the early stage, companies concentrated on preferential promotions, and the average daily production and sales were mostly 300%-400%. In the second half of the year, the frequency of promotions accelerated, and the average daily production and sales were around 200%. However, since November, only a few companies have production and sales on the day of polyester filament promotions. With increased volume, most companies produce and sell 100%-200% of their sales. Due to the weak trend of raw materials at this stage, the focus of polyester filament transactions has shifted downwards while the polymerization cost has dropped simultaneously. Therefore, currently, polyester filament still maintains a certain cash flow space. Judging from the recent closing cash flow situation of various polyester varieties , except for the average daily cash flow of polyester bottle flakes at 1335.43 yuan/ton, which is at a high point, the profit levels of other polyester varieties, such as polyester chips and polyester staple fiber, are lower than polyester filament.
Therefore, under the premise that demand continues to shrink, the current cash flow of polyester filament is still at a relatively high level in the polyester industry chain, so there will still be no shortage of corporate profit promotions in the later period.
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