According to feedback from enterprises, the domestic epidemic situation has blossomed in many places since 2020, and some orders that returned to China in the previous two years have flowed out again due to the relaxation of epidemic control in Southeast Asian countries, resulting in a year-on-year decline in domestic textile exports. Domestic downstream orders have shrunk to varying degrees. Judging from the situation in Southeast Asia, although Southeast Asia’s textile and apparel exports are still high, the start-up of textile enterprises in the third quarter fell sharply from the previous quarter, indicating that later orders are difficult to sustain. European and American clothing and fabric wholesalers are also facing extreme challenges. Huge inventory pressure. The performance of both domestic and foreign demand is poor, and textile companies are facing a life-or-death crisis. Can the cold winter of polyester companies be far behind?
Polyester production companies are committed to realizing the integrated development of the industrial chain, which improves its ability to resist risks through self-production and sales. In the fourth quarter, the polyester industry faced dual pressures of overcapacity and weak demand. Although the PTA processing fee reached 800+ yuan/ton, polyester generally suffered a loss of 400-500 yuan/ton. The profit on the PTA side completely squeezed out the profits of the downstream. Polyester companies are facing greater pressure in production and operation, and are less likely to hoard PTA. The inventory of raw materials is very low, and they are more willing to use it as needed.
The inventory days of polyester finished products are also becoming more and more tolerant as the market situation changes. Polyester companies generally have about 30-45 days of filament inventory. Except for a large factory that has inventory, short fiber is basically in a negative inventory state. . The top four polyester companies even choose to suspend production for maintenance in mid-to-late September to relieve inventory pressure. The company believes that downstream terminals perform best during the Golden September and Silver Ten periods. In the fourth quarter, in addition to Double Eleven and Christmas, they can occasionally look forward to it. Overall, we are not very optimistic about the market demand. This is also a helpless move for companies to choose the peak season to reduce production.
From crude oil to PX to PTA to PF, the profits of the industrial chain are diminishing. The tight supply of PX caused by the demand for oil adjustment is still maintained, and the profits on the industrial side are also concentrated in the naphtha-PTA link. During the year, the price difference of PXN reached a historical high of US$685/ton for the same period in the past. The price has now fallen back to around US$400/ton, which is still at a relatively high level.
It is reported that Shenghong Petrochemical’s PX device has been postponed to November. In the medium and long term, in terms of PX, Dongying Weilian’s 2 million tons of PX, Guangdong Petrochemical’s 2.6 million tons, and Shenghong Refining’s 4 million tons of PX units will also be put into operation in the fourth quarter. The supply of PX and PTA will gradually ease in the fourth quarter. As the price of PX in the aromatics industry chain collapses with the price of refined oil products, the high PXN price difference is unsustainable and will start a downward trend. In Q4 of 2022, a total of 7.5 million tons of devices (Jiatong Energy 2.5 million tons, Dongying Weilian 2.5 million tons, Hengli Petrochemical Line 6 with 2.5 million tons) will be put into operation, accounting for 10.83%.
PTA equipment is gradually put into production. In the fourth quarter, excess pressure may become more obvious. Domestic supply and demand pressures still exist and downstream demand is weak. There is room for further compression of processing fees. Since the beginning of this year, the price trend of PTA has fluctuated violently. It only took about one month to go from the prefix “7” to the prefix “5”. Under the influence of multiple factors, the center of gravity of PTA prices is expected to shift further downwards as PXN weakens.
In 2022, the price of crude oil will continue to rise due to supply-side disturbances, and the polyester industry chain will face a pattern of rising cost-end prices and weak demand-side drag. Since the beginning of the year, crude oil prices have slightly broken new highs, and industrial chain profits have gradually concentrated in the upstream. The Russian-Ukrainian war broke out in March, and rising costs drove PTA prices to continue to rise. The global refined oil market presents structural contradictions, which also have a significant impact on the aromatics market.
After the Dragon Boat Festival, the strong demand for gasoline led to a surge in demand for MX oil blending. The price of flour MX was higher than the price of bread PX and finally got out of control. After the prices of toluene and xylene (MX and PX) in the United States rose sharply, the price difference between toluene and xylene in Asia widened. , Yamei’s logistics window is open. The summer travel peak is approaching and the maintenance volume in Asia is relatively high. The shortage of PX supply has directly pushed up the PTA futures price to the high point of the year. Judging from the price trend, in the first half of 2022, the PTA price of the polyester industry followed the price of oil, and the 2209 contract exceeded the high of 7,700 yuan/ton for the first time since September 2018.
Judging from China’s data on the overall situation of the textile industry in 2022, my country’s textile and apparel exports in August were US$30.976 billion, a year-on-year increase of 2.88%. Among them, the export value of textiles (including textile yarns, fabrics and products) was US$12.490 billion, a year-on-year decrease of 0.23%; the export value of clothing (including clothing and clothing accessories) was US$18.486 billion, a year-on-year increase of 5.10%.
In the first half of the year, both domestic and foreign sales of textiles and clothing declined year-on-year from a volume perspective. In the third quarter, Jiangsu and Zhejiang implemented high-temperature power-limiting policies. As a key target of printing, dyeing and textile industries, the textile industry is a high-energy-consuming industry. Many textile companies were listed on the list and strictly implemented the shutdown of high-energy-consuming companies for maintenance. The load of polyester and weaving links decreased. Since the beginning of this month, the market for gold, silver and silver has started, and the polyester market demand has improved slightly. The shipment of raw materials and gray fabrics has improved, the number of orders has increased, and the start-up of looms has also shown a significant rebound.
Today, with the integrated development of the polyester industry chain, faced with profit compression and sluggish production and sales, how have the business models of production companies changed? With more than half of the gold nine, is the silver ten worth looking forward to? How do companies view the market demand in the future? In order to further deepen the polyester industry chain and better serve the entity enterprises in the industry chain, the PTA and short fiber research activities hosted by Guangzhou Futures were fully launched in Zhejiang, Jiangsu and other regions from September 19th to 22nd. This survey visited a total of 6 production companies and their wholly-owned subsidiaries, mainly focusing on PTA, staple fiber, and filament production companies.�. Enterprises choose to reduce filament and short fiber production in the peak season and reduce the load. As for the start-up time, it depends on the later destocking situation. After the centralized cancellation of warehouse receipts in September, the tight liquidity situation in the PTA market may be alleviated. The market lacks selling orders for PTA, and demand has improved month-on-month, but is still low year-on-year, and downstream demand does not support TA’s continued strength.
E: Mainstream domestic short fiber supplier
1. Device operation:
The company’s annual output is 550,000 tons/year and its daily production volume is 1,500 tons/day. At present, the company is engaged in differentiated fibers, which are used in textiles, non-woven fabrics, etc. Among them, differentiated fibers account for 85% and cotton type accounts for 15%. In addition, 1/3 of the products are exported to Europe, accounting for more than 100,000 tons. The raw material PTA is mainly imported from Zhangjiagang, Yisheng, and Hengli. There are contract goods, spot goods, and disks to form polyester. The company has plans to add slicing equipment, and the time from the shutdown to the start of the short fiber equipment is estimated to take 2 weeks. As companies continue to reduce short fiber production, negative inventories are maintained.
2. Sales method: processing fee
3. Enterprise participation in futures:
As a short fiber delivery brand and factory warehouse, this company has a high degree of participation. Participate in short fiber sales, processing order arbitrage, material PTA procurement, etc. However, downstream cotton spinning mills and yarn mills do not participate in futures to a high degree, and downstream cotton spinning mills and yarn mills still accept the fixed price.
4. Market outlook:
This year is the most difficult year for the polyester industry chain. Industry profits are declining and the trend of short fiber is cost-driven. The inventory base and days are both the highest in history, and the market outlook is not optimistic. If destocking is not maintained before and after the Spring Festival, companies will be under great pressure. This year’s demand-side market is coming to an end, and the chemical fiber and textile industry is facing a cold winter. If downstream demand continues to be sluggish, the price trend of raw material PTA will continue to decline. Orders in Southeast Asia and Vietnam also experienced a large-scale shrinkage, and the economy was in overall recession. The company’s business philosophy is not to keep inventory but to maintain destocking. Companies have reduced production, but industry demand has not picked up. Production and sales are unbalanced, and filament inventories have accumulated.
New Year’s Day is the Spring Festival. At present, yarn mills are losing money, and prices may rise from lows next year. The company believes that through large-scale production reduction and suspension, the valuation will be restored after the New Year. PTA’s financial attributes are strong, but the subsequent supply and demand relationship is not enough to support TA’s continued strength.
F: Mainstream domestic short fiber supplier
1. Device operation:
The company currently has a production scale of 550,000 tons of polyester staple fiber, and the equipment shutdown and maintenance load must not be less than 50%. This year, filament and yarn inventories are extremely high, but short fiber inventories have been in negative inventory due to the suspension of production in the early stage of the epidemic. In early September, PTA did experience a tight spot situation, but it only lasted for 1-2 days. The amount of materials recycled by the company is tens of thousands of tons, which is relatively fixed and is not affected by market prices, and is for exclusive use. There is substitution in the prices of cotton and short fiber, and the price of pure polyester and polyester cotton has a substitution effect when the cotton price drops to around 14,500.
2. Sales method:
The company takes spot PTA at PX+800, and the upstream long-term contract is the main one. The staple fiber market does not participate in promotional activities very much, and the promotional effect is not good.
3. Enterprise participation in futures:
There are more upstream participants in the short fiber market, but less participation in the downstream market at point prices, and less locks in the long-term market. Enterprises participate in raw material hedging and processing fee hedging (PTA-PF) in the futures market. Different short fiber products have certain premiums and discounts. When the market supply and demand are different, the premiums and discounts between products will also change. If there is a liquidity problem in the market, the range of premiums and discounts will change.
4. Market outlook:
Companies believe that demand is at its best from mid-September to mid-October. After that, demand weakens and overall demand shrinks. Companies believe that if current inventory levels cannot be destocked smoothly, they will face pressure in November and December. However, companies also believe that if this wave of inventory depletion goes smoothly, there will be occasional double 11, Christmas, and Spring Festival expectations, and there will still be rigid demand around January next year, which will lead to inventory replenishment.
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