Recently, some polyester factories have launched polyester filament sales again. Polyester raw material factories cut prices and promote sales mainly because the overall production and sales are not prosperous. Except for the “one-day trip” purchases caused by promotions, production and sales during the rest of the period basically remained at a low level of 40-60%. Many weaving companies are unwilling to buy into the lackluster price cuts and promotions offered by raw material factories.
At present, the price of polyester filament has actually reached a relatively low level, but why are weaving factories unwilling to purchase more? Where will polyester filament prices go in July?
Changes in raw materials and weak orders
Weaving factories purchase prudently and reduce operating hours to avoid risks
On the surface, with the collapse of raw materials, the profits of gray fabrics have improved, and textile mills have not yet made large purchases. But the problem is that on the one hand, in the face of the current turbulent market environment, textile mills are very cautious in purchasing. Although the price has dropped a lot from before, the confidence of textile mills has been hit due to the sharp drop in raw material prices.
On the other hand, companies that stocked up in the early stage still have a large amount of high-priced raw materials purchased in the early stage that have not yet been digested. Of course, textile mills can make purchases now to dilute production costs, but at a time when raw material inventories and financing costs are rising, doing so is obviously risky, especially when textile mills often complain about weak orders. In June, orders for water-jet looms gradually decreased, while orders for knitting and circular knitting machines increased slightly. In July, foreign trade orders may increase partially, but the domestic trade market is still mainly light. Coupled with the wide price fluctuations in the upstream chemical fiber market, it is expected that the operating rate of downstream factories will drop to a low level to avoid production risks, and in addition, they will actively sell inventory to collect cash flow. Affected by this, it is expected that in July, the downstream operating rate will decrease and the inventory of gray fabrics will decrease.
For textile mills, the best situation now is that the price of raw materials stabilizes as soon as possible, and then orders for gray fabrics can be priced reasonably. Only in this way can profits be brought about. If the market price of polyester filament continues to fall below the cost line, some downstream factories may purchase the bottom appropriately at the end of the month, and the inventory of raw materials at the end of the month may increase.
The implementation of production cuts has not yet been announced
Polyester filament supply pressure is still high
Polyester factories plan to restart many installations, and polyester filament supply pressure is still high in July. In early July, the three major mainstream polyester factories reduced production by another 2.12 million tons. The specific implementation time of the subsequent 2.12 million tons of production reduction has not yet been disclosed. However, as the gross profit of the industry recovers, the June maintenance and preliminary maintenance will involve a total of about 2.3 million people. Tons of polyester filament equipment is planned to be restarted in July. It is expected that in July, the supply pressure of polyester filament will not decrease, the average monthly operating load may be around 73.5%, and the output may be around 3.1 million tons. Under the combined effect of production cuts and promotions, polyester filament factory inventories may first rise and then fall in July, and the end-of-month inventories are expected to be around 27 days.
Recurrent supply-side concerns
Cost support is weak
In July, the polyester filament market cost support may be weak. U.S. gasoline inventories are increasing, and OPEC+ production increases continue to accelerate. However, supply-side concerns are recurring, which will provide some support for the oil market below. International crude oil is expected to fluctuate widely, and the center of gravity of fluctuations may shift further downwards. The market supply of the upstream raw material PTA is increasingly abundant, but on the demand side, due to expectations of production cuts by polyester factories, there is room for price decline. Another raw material, ethylene glycol market, is expected to continue to be weak due to little change in supply and expected decline in demand.
On the whole, in July, cost support may be weak, and the fundamentals of supply and demand are difficult to significantly improve, and the market price of polyester filament may fluctuate weakly. In early July, the cost driver weakened, but mainstream polyester factories reduced production to protect prices. The market price of polyester filament may have a certain resilience, and the decline in market price may be relatively small. However, the continued losses of downstream texturing and weaving factories have led to a decline in their production enthusiasm. It is expected that downstream demand will continue to weaken. In late July, polyester factories may increase their promotional efforts, and the market price of polyester filament may drop significantly, but it will not Excluded, as the polyester filament industry suffers losses again, the market price of polyester filament may have room for a weak rebound.
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