Entering November, for the textile and clothing industry chain, the peak season orders of “Golden Nine and Silver Ten” have generally ended. In fact, after experiencing weak performance in the first three quarters, the market as a whole has lacked confidence in the fourth quarter. Indeed, from the perspective of the entire downstream industry, the textile export situation is still severe. It is expected that the textile industry will also enter the off-season of demand in November. Affected by the shrinking demand side, the “cold winter” mode will also begin.
From the perspective of domestic sales, sporadic epidemics are currently continuing in various places. Slow logistics and declining demand and consumption caused by epidemic control have seriously affected the market trading atmosphere. The inventory of raw materials in gray cloth factories has dropped, and the willingness to replenish the inventory is not strong. The inventory of finished products has begun to accumulate, and working capital is trapped.
In terms of export sales, due to expectations of economic recession in Europe and the United States, rising inflation, and lack of consumer confidence, overseas clothing and fabrics are also facing great inventory pressure, and exports are hardly optimistic. The latest export data can prove this. In September, textile and clothing exports fell by 3.7% year-on-year and 9.44% month-on-month.
The peak season of “Double 11” and Christmas orders has passed, and the destocking process of domestic textiles is slow. In November, in order to eliminate inventory and protect profits, will polyester companies conduct large-scale production cuts?
CCF polyester industry senior analyst Ni Guomiao believes:
After the National Day, the spot price of polyester raw materials fell significantly. In addition to the weak macro atmosphere, funds are still trading on the possibility of a substantial reduction in polyester load production in the future. Judging from the current situation, it may be a high probability that polyester production will be significantly reduced around the Spring Festival this year, and the market should generally accept this view. The reason is that the current polyester inventory is still at a high level, coupled with the seasonal weakening of demand in the later period. , if polyester companies want to control New Year inventory, they must significantly reduce production.
Although the result of a large polyester production reduction around the Spring Festival is a high probability event, there are two possibilities for the production reduction path. Previously, most of the market believed that polyester inventory must be reduced to a reasonable level of about half a month before the year. However, the current overall average inventory is still about one month, which means that there are still more than 2 months for polyester to be sold before the year. Enterprises need to reduce production for half a month, not to mention that demand will weaken seasonally in the later period. Therefore, in order to achieve the goal of destocking before the end of the year, production must be significantly reduced in advance starting from November, and then continuing until the Chinese New Year.
But the reality is that the average operating load of many polyester direct spinning enterprises is only about 70-80%. There is very little room for the equipment to continue to reduce the load and reduce production. Any further reduction will only lead to the complete shutdown of production. If the complete shutdown of the polyester plant involves another practical problem, that is that workers have to take an early holiday for the New Year, but at this point in time, it seems a bit early. In addition, polyester production will be significantly reduced and suspended during the New Year. After a large number of workers go home for the holidays, will there be a possibility that workers will not be able to arrive in time due to the epidemic after the new year, and there is a possibility that the equipment will not be restarted in time.
Therefore, we believe that there is a possibility of a second path for polyester production reduction. Polyester companies may consider inventory control and solve the problem of workers taking early leave and returning to work after the holidays, choosing to postpone the shutdown of the entire unit as much as possible and delay the restart after the Spring Festival. Judging from the fact that a few small and medium-sized enterprises currently announce their annual maintenance plans in advance, most of them are scheduled for mid-December or later. If this is the case, at least there may not be a significant production reduction at the polyester filament unit end in November, and the polyester load estimate in November will be higher than the market imagines. But at the same time, the load in February after the Spring Festival will be lower than market expectations, even in March.
Of course, the cost of delaying polyester’s production cuts before the year is that the industry will intensify, losses will continue, and polyester filament prices will continue to drop in the short term.
On the 3rd, the news of polyester production cuts was fermented again, and the polyester load finally dropped. As of Thursday, the polyester load dropped to 83.2%. Will there be further decline in the future?
Shen Yinjiao, senior analyst of CCF polyester industry, believes:
From a cost perspective, as the new unit is about to be put into operation, the PX unit has recently been reduced to a low level of 265 US dollars/ton. The efficiency has dropped significantly, and the MX-PX link is facing losses. The integrated unit is acceptable considering the diesel cracking price difference. Therefore, individual factory production plans have also been adjusted. It is reported that a large PX factory in East China plans to reduce its 9 million tons of PX load to around 75~80% in the near future and increase diesel production. The recovery time will be tracked. PX output is expected to decline, and PXN will also recover around $299/ton in the short term.
From the supply side, the operating rate of PTA has declined much faster than that of polyester.Reduce the burden. After the end of October, Hengli Petrochemical’s 2.2 million tons of maintenance, Yisheng’s 3.75 million tons, and Yizheng’s 350,000 tons of maintenance were reduced to 50%. Some individual units also had their workload reduced due to raw material problems. Yesterday, the PTA operating rate dropped to 71.2%, compared with It fell 7.3 percentage points from its October high. Therefore, compared with the reduction of polyester, the supply reduction is more obvious. PTA has not yet experienced any obvious accumulation of inventory.
</p
