Recently, the three major organizations of the Organization of the Petroleum Exporting Countries (OPEC), the International Energy Agency (IEA) and the U.S. Energy Information Administration (EIA) have successively raised their global oil demand expectations for 2021. Although OPEC will increase oil production by 350,000 barrels per day in May, 350,000 barrels in June and 441,000 barrels in July, production still cannot keep up with demand growth as the economy recovers and consumption increases. , crude oil inventories have always remained low.
From the perspective of my country’s textile fabric market, the traditional “Golden Three” has become a mess. Finally, the “Silver Four” has come. The price of textile raw materials has dropped, and fabric companies can take advantage of it. They have said they are “stable”, but the bullish oil prices have made fabric companies that have just “breathed a sigh of relief” worry again – will the rise in raw material prices come back?
Oil prices are likely to rise
Data released by the International Energy Agency show that in mid-to-early April, average daily gasoline consumption in the United States rose to 8.9 million barrels, the highest level since August last year. As COVID-19 vaccination accelerates, especially as the temperature in the northern hemisphere rises, and summer is approaching, travel and tourism in Europe and the United States will become more frequent, and gasoline and fuel consumption will also continue to increase. Therefore, the International Energy Agency has raised its forecast for global oil demand growth in 2021 by 230,000 barrels per day. After global oil demand fell by 8.7 million barrels per day last year, global oil demand is expected to increase by 5.7 million barrels per day in 2021, reaching 96.7 million barrels. /day.
There is no doubt that the continued recovery of demand has accelerated crude oil consumption. Data released by the U.S. Energy Information Administration showed that in mid-to-early April, U.S. commercial crude oil inventories were 490 million barrels, a decrease of 5.9 million barrels from the previous month, exceeding market expectations. During the same period, the average daily crude oil production in the United States was 11 million barrels, an increase of 100,000 barrels from the previous month. As the U.S. market gradually recovers, demand for crude oil has surged. The increase in daily supply has not kept pace with the increase in consumer demand, and it is natural for inventories to decrease.
Although Brent crude oil and U.S. crude oil prices have been fluctuating recently, and the market is worried that the surge in COVID-19 cases in India will depress the country’s fuel demand, as signs of demand recovery in Europe and the United States remain positive, a Major international banks are optimistic about oil prices. Goldman Sachs has a more optimistic view on oil prices, predicting Brent crude prices will reach $75 a barrel in the third quarter of this year.
An analysis article by Guotai Junan, a comprehensive financial service provider, pointed out that although crude oil price adjustments may continue to affect macro sentiment and liquidity expectations in the short term, under the control of supply by the Organization of the Petroleum Exporting Countries and its allies, , the fundamentals are highly supportive, and before the peak demand period in the northern hemisphere summer, an upward trend in crude oil prices is still a high probability event.
As we all know, the price trend of my country’s textile and chemical fiber raw materials is highly consistent with the rise and fall of crude oil prices. At the beginning of this year, the price of textile raw materials rebounded with international oil prices, and rose sharply after the Spring Festival, with prices almost exceeding those before the outbreak. Similarly, fabric prices also took the Spring Festival holiday as a watershed, and there was a very obvious price difference. It is very common for prices to increase by more than 20% after the new year. This has also led to the previous orders of many fabric companies due to the excessive cost of chemical fiber fabric products. High and canceled, postponed.
Raw material prices remain unchanged
However, The recent crude oil price continues to be promising, but it has not yet led to price increases for related products in the downstream polyester industry chain.
The China Keqiao Textile Index released on April 26 showed that the price index of polyester raw materials fell slightly from the previous month. The mainstream PTA spot price in East China was 4,490 yuan/ton, a decrease of 10% from the previous month. The mainstream price of ethylene glycol MEG is 4,800 yuan/ton to 4,877.5 yuan/ton, a month-on-month decrease of 245 yuan/ton to 365 yuan/ton; the polyester chip market quotation fell month-on-month, and semi-gloss chip cash in Jiangsu and Zhejiang areas may be 3 The monthly acceptance price is 5875 yuan/ton to 5975 yuan/ton, a month-on-month decrease of 25 yuan/ton to 150 yuan/ton. The price of polyester filament in Xiaoshao area fell month-on-month, with POY quoted at 7,550 yuan/ton, a month-on-month decrease of 50 yuan/ton to 65 yuan/ton; FDY quoted at 8,550 yuan/ton, unchanged from the previous month; DTY quoted at 8,950 yuan/ton, month-on-month. It fell by about 50 yuan/ton.
The index report also pointed out that terminal demand is currently the dominant factor affecting market prices. Recently, factors such as poor receipt of new orders from downstream and poor placement of overseas orders have been restricted. Polyester prices are rising.
“With no improvement in terminal clothing orders, the impact of oil price trends on the overall textile industry chain in my country is very limited. Perhaps a short-term increase in oil prices will promote a short-term increase in raw material prices, but It will eventually fall back due to poor demand.” Liu Juan, the relevant person in charge of Wuhan Yudahua Textile and Garment Group Co., Ltd. believes. However, she also emphasized that in today’s turbulent market situation, there are too many uncertainties, and often a slight change can change the original market direction. The market still needs to pay close attention to the trend of the macro environment.
“From petroleum refining to petrochemical products such as polyester, to polyester chips, to yarn and fabrics, price transmission takes a certain amount of time.” Related to Xiamen Xianglu Chemical Fiber Co., Ltd. The person in charge said that the increase in the price of chemical fiber products is generally not as large as the increase in oil prices. Since the situation and supply and demand of the textile industry are different every year, we cannot just look at the data. “The current situation is that upstream supply exceeds demand and downstream supply exceeds demand.”
According to relevant platform monitoring, in early April, the operating rate of looms in Jiangsu and Zhejiang reached the highest level since the Spring Festival.A high value, but such a high startup rate lasts only a short time. The startup rates of most clusters have been declining for more than two consecutive weeks. The latest statistics show that at the end of April, the comprehensive operating rate of chemical fiber weaving in Jiangsu and Zhejiang was 76.05%, a month-on-month decrease of 0.49 percentage points.
The market outlook is not clear yet
The fluctuations in oil prices seem to be unacceptable to many textile people. Plays a major role in the price of raw materials. The startup status of the weaving cluster is the best explanation of the current textile market. The traditional peak season is like this, but what will the market trend be like in the off-season that follows?
This year’s situation is somewhat special. According to analysts from upstream and downstream enterprises and securities firms in the textile and apparel industry chain, India is the world’s second largest textile manufacturer and exporter after China. As the epidemic in India worsens, the country’s textile companies are unable to guarantee normal delivery, and a large number of European and American textile orders have been transferred. Chinese companies have received return orders. Overseas return orders are expected to grow further from May to June this year.
A Guangdong fabric foreign trade company revealed in a recent interview with the Financial Associated Press: “In the past two days, there has been a significant increase in buyers inquiring about weaving and fabric prices. At the same time, the company The preferential margin for customers is also narrowing.”
However, some people in the industry believe that considering the epidemic and other uncertain factors, the second round of production and sales situation of my country’s fabric companies and foreign trade companies How much favorable support it can receive remains to be seen. In addition, orders have been “changed” by companies in India, Bangladesh and other countries, making the contract price with already thin profits uncompetitive. Even if European and American customers place orders directly with Chinese companies, they must pay attention to increasing the contract price, otherwise it will be difficult for Chinese fabric companies and foreign trade companies to digest it.
China·Keqiao Textile Index predicts that there are still uncertainties in the time and degree of global consumer demand recovery. The export of anti-epidemic materials, which played a major role in driving growth in the early stage, has gradually declined. Only The trend of relying on a very low year-on-year base to drive growth will not continue in the long term. Therefore, it is expected that although exports will still maintain growth in the second quarter of this year, the growth rate will return to normal levels, and my country’s exports of bulk commodities such as textiles and clothing will continue to achieve restorative growth. As we enter the post-epidemic era, countries have different degrees of epidemic blockade and uneven economic recovery. In addition, shipping companies have strengthened their dominance on the entire trade route. Starting from April, shippers may face a new round of freight rate increases and Impact of Peak Season Surcharge (PSS).
Based on the trend of the domestic trade market, the overall market transactions will show a volatile and slightly downward trend in the market outlook, and the spot transactions and order shipments of spring fabrics will partially decline. Downstream demand will be partially insufficient, the market trend will be flat, and enthusiasm for fabric subscriptions will decline; due to partial reductions in orders from some traders and weaving manufacturers, the spring fabric supply will decline in the future, and spot transactions and order shipments will continue to rebound. Some batch orders for spring fabrics have declined, the operating rate of weaving companies has partially shrunk, and the output of printing and dyeing companies has shown insufficient. It is expected that the enthusiasm for subscription of mass products will decline month-on-month. </p
