Although March and April are the peak seasons for the textile industry, this year’s peak season is obviously not qualified. Except for a wave of inventory at the beginning of the year, the overall performance of the weaving market was dull. Taking the operating rate of looms in various regions as an example, unlike the rapid rebound after the year, after entering mid-to-late March, the overall operating rate began to stabilize at around 80%, and the upward momentum was obviously insufficient.
According to feedback from the person in charge of a weaving company, their orders in the first week after the new year There are quite a lot of them, especially the low-priced fabrics that were stocked years ago. Many of them have been taken away by big customers. However, there is almost no interest in the fabrics made from high-priced raw materials. Basically, there are only some inquiries, but there are very few actual orders.
A company that produces home textile washed fabrics and mainly sells market orders reported that downstream consumption is not really good, and the price increase is just the result of accumulation of inventory in various links. The company believes that from October last year to now, the market has not really improved or recovered. It is just because of the increase in raw material prices that everyone has stocked up. In previous years, the inventory was only hoarded in a certain part of the circulation chain. This year, from the first-level stores , secondary stores, finished product factories, to terminal retail, all are accumulating inventory little by little. It is difficult to remove the inventory from the industrial chain at once.
The expected demand for “gold, three, silver and four” has not come, and the market currently has different views on demand. The optimistic view is that during the decline of raw materials, the terminal did not have accumulated inventory, which means that the terminal market has digested the inventory through profit concessions. The current demand is not bad. Foreign orders are not good, but domestic demand is still relatively strong. The pessimistic view is that the demand for orders in March is advanced, seasonal orders will be maintained during the peak season, and orders exceeding expectations will not be obvious. Orders for the next quarter are expected to arrive in May-June.
From the perspective of downstream research, the decline in raw materials has hit the market mentality. The epidemic in Europe has repeatedly disrupted the rhythm of demand return. There are not no orders, but some were overdrawn before March. Some of them have not been released yet. According to the overseas autumn and winter season, delivery is from June to September, and the procurement time of raw materials is expected to be in April. The overall demand may be reflected in flat demand in April, and orders will gradually return from May to June.
At present, the weaving season is not prosperous. If there is no upward trend in crude oil, many downstream companies will just need to purchase and stock up in stages. Weaving will make orders at a profit. Order expectations are unlikely to drop significantly in April. The number of looms has increased significantly compared with the same period last year, and rigid demand still supports polyester. However, polyester inventory may gradually increase due to flat production and sales. Judging from the current inventory of polyester, it can maintain a high load of 93-94% before April. The high load of polyester supports demand for raw materials PTA and ethylene glycol, but high inventory and weak demand do not drive much profit growth.
If orders arrive from May to June, “the off-season will not be slow”, downstream purchasing and stocking will increase, polyester inventories will decrease, profits will rebound, high production capacity will be maintained, and polyester fundamentals will improve. The probability is increasing, but for PTA and ethylene glycol, which will enter the production cycle from May to June, there will be too much new supply and the profit driver will still be limited. The expected benefits of “not slow in the off-season” may be more reflected in the polyester segment.
If there is a positive trend in crude oil, terminal speculative stocking and unplaced orders or accelerated orders, and cost and demand resonate, we are optimistic that the price of PTA ethylene glycol will move up, and production expansion will What rises under the cycle is cost. </p
