Since the beginning of this year, as the cost-end oil prices have continued to rise, the profits of polyester products have continued to shrink. When the profits of polyester filament were at their worst, they were once reduced to a historical low of -800 yuan/ton. Compared with PTA and other downstream polyester products, polyester products that continue to hit new lows in profits can be called the worst category in the polyester industry chain.
Things change and people change in the blink of an eye
Most polyester products are in deep losses!
Except for bottle flakes, which have experienced a rebound in profits due to tight supply, except for bottle flakes, the profits of the entire polyester industry chain have been shrinking recently, with losses across the board from PTA, polyester chips, polyester filament to polyester staple fiber.
In 2021, the price of raw materials represented by crude oil will start to rise. By 2022, affected by emergencies, crude oil prices will continue to rise, driving the prices of dual raw materials PTA and ethylene glycol to rise in shock. Under the rising polymerization costs, by Constrained by the intensifying contradiction between supply and demand, the price increase is much lower than the increase in raw materials, resulting in continuous compression of gross profits and falling into losses.
Since the beginning of this year, the price of PTA, an important raw material in the upstream of the textile industry, has risen strongly. Data on June 21 showed that the reference price of PTA was 7,000 yuan/ton, while the product was quoted at 5,000 yuan/ton at the beginning of this year.
This means that PTA prices have increased by more than 35% since the beginning of this year. The upstream raw material of PTA, PX, has increased even more, with the price increasing by as much as 47.76% since the beginning of the year. The strong cost of raw materials has caused the profit margin of the polyester industry chain to fall into the loss zone for a long time. It has been in the red in the first half of this year and may continue to lose money in the second half of this year.
lack of demand
But there is still 7.14 million tons/year polyester production capacity launched!
In recent years, with the rapid development of China’s economy, China’s polyester industry has gradually improved its global market position. Data shows that China’s polyester production has increased its global share from 43.54% to around 64.35% in more than ten years.
China is the global polyester production and consumption center, and Jiangsu and Zhejiang are China’s main polyester production areas. The polyester production capacity of Zhejiang and Jiangsu provinces accounts for approximately 77% of the country’s total polyester production capacity.
Production capacity of the top 10 polyester manufacturers in China (unit: 10,000 tons)
2022 is still the period when polyester production capacity will be intensively put into operation. According to statistics from relevant agencies, the domestic polyester planned new production capacity in 2022 is 7.14 million tons/year, including 2.78 million tons/year of filament and 4.36 million tons/year of short fiber.
However, since 2021, the profitability of the polyester industry has continued to decline, mainly due to insufficient demand follow-up amid supply growth and the deterioration of the supply-demand relationship. New production capacity will be gradually put into operation, and the supply of polyester will increase significantly. However, on the demand side, the performance of various consumer sectors is tepid, and there is no clear increase expected. The oversupply situation of polyester will continue to deepen, the bargaining power of buyers will increase, and the profitability of polyester will increase. will keep falling.
In just three years, the profits of polyester products have fallen from high to high. This is due to the continued expansion of new production capacity, which has led to an increase in the imbalance between supply and demand, and high crude oil prices, which have driven up polymerization costs. In the future, planned production capacity may continue to be put into operation, and the oversupply situation in the polyester market may continue to intensify; high oil prices may become the norm, and PX-PTA price support is strong. The high cost situation is difficult to alleviate, and profit performance may not be optimistic.
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