Introduction: Since mid-to-late June, polyester industrial yarn factory quotations have been at a high level for more than a month. During the period of strong prices, international crude oil at the cost side experienced a sharp rise and then a sharp fall. Polyester raw materials fluctuated violently, and polymerization costs were lower than in June. The mid-to-low high fell by 2,000 yuan/ton, a decrease of 24%. In the face of violently fluctuating raw materials, the polyester industrial yarn market’s “indifferent” performance has left some market participants confused about future trends. Let’s briefly estimate several possibilities for the market in the future.
Let’s first sort out the price trends
According to data from Longzhong Information, the price of polyester industrial yarn from June to July this year hit a new high in the past three years, at 12,000 yuan/ton, with some sporadic transactions at 12,150 yuan/ton, an increase of 3,900 yuan/ton, or 48.15%, from the low at the beginning of the year. . Recently, due to the drag on the cost side and the continued poor demand side, traders have shipped goods and the market price has loosened. As of July 19, the market for polyester industrial yarn ordinary high-strength 1000D/192F closed at 11,000 yuan/ton, down 1,000 yuan/ton from the high level. tons, a decrease of 8.33%. ,
Let’s look at the cost and profit performance again
From the comparison of the raw material prices of polyester industrial yarn and the two production processes in the chart above, in the past month, the price of polyester industrial yarn has increased by 800 yuan/ton, an increase of 7.3%, while the raw material end has shown a downward trend, with the polymerization cost end having the largest decline. at -23.5%. The market price of polyester industrial yarn and the trend of raw materials have deviated significantly for the first time.
Figure 2 Polyester industrial yarn raw material price trend chart
The rapid decline in costs has also allowed polyester industrial yarn profits to quickly recover, with the processing range restored from 2,000 yuan/ton to 3,900 yuan/ton. Almost all existing polyester industrial yarn factories are profitable due to processing fees. However, the downstream resists the high price of polyester industrial yarn and purchases raw materials only to deliver early orders. Factory inventories have increased and the market mentality has become more cautious, resulting in factories experiencing high prices for the first time in the past three years. In the face of profits, they dare not increase their profits.
Table price comparison chart of polyester industrial yarn and related raw materials
Unit: Yuan/ton
Source: Longzhong Information
The fundamental reason is that demand drags down
According to Longzhong’s understanding, the downstream consumption areas of Jiangsu and Zhejiang for polyester industrial yarns are expected to gradually reduce loads from July 20 to the end of the month. On the one hand, there is a shortage of raw materials, and on the other hand, it is in response to the call for power rationing in high-temperature countries. The main reason is that orders continue to In short, the market has poor expectations for the second half of the year.
The cost side fluctuates violently. After the polyester industrial yarn processing fee is quickly repaired, the market should either follow the raw material side and pass the profits to downstream; . Mainly due to the poor performance on the demand side, and facing the existing market price of polyester industrial yarn, there is almost no profitable industry in the downstream industry. Since if you move, you will lose money, so it is better to wait and see.
Based on the above brief market analysis, we make the following possible estimates for the future trend of polyester industrial yarn from July to August:
Trend 1: Factories continue to raise prices or maintain profits. With sufficient funds and factory inventory pressure being able to withstand, if there is no obvious change on the supply and demand side, the downstream operating rate will decline. We may expect demand to improve in mid-to-late August, and the downstream will accept high-level raw materials and factory processing fees will be maintained;
Trend 2: Factories are concentrated and massive profits are being deducted from warehouses, and profits are being squeezed rapidly. The industry’s operating rate maintains a volatile trend, demand fluctuates and remains stagnant or weakens within a narrow range, factory inventories increase, factories focus on destocking, and downstream stocks focus on replenishment;
Trend Three: Factories offer profits within a narrow range, and profits are squeezed. Although profits are squeezed, some demand is maintained. Industry inventories accumulate slowly and the transition is smooth. If the market does not improve significantly from August to September, factory operating rates will continue to be squeezed.
At present, Longzhong believes that trend three may be more likely in the short term, but no matter what the market direction is, the weakening of the demand side is already expected. In the short term and later trends, we need to pay attention to the impact of large fluctuations in international crude oil on the cost end of polyester industrial yarns. .
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