The textile industry is entering an era when “flour is more expensive than bread”. At present, the profits of spinning companies are gradually shrinking. Raw materials are fluctuating at a high level due to the situation in Russia and Ukraine, but yarn prices have not increased or even shown signs of decline. Spinning companies have fragmented, small and medium-sized enterprises are suffering one after another, and production reduction and shutdown operations have frequently appeared.
After the Spring Festival, domestic Zheng cotton continued to oscillate. Although geopolitics caused international oil prices to rise and fall sharply, the direct effect on cotton was average. Polyester staple fiber was significantly affected by the situation in Russia and Ukraine, with a larger amplitude. At present, textile raw materials are generally in a high and volatile market, but downstream demand remains weak. The market once had high expectations for the peak season demand from March to April. However, judging from the performance in early March, the recent demand is likely to be “not strong in the peak season”. Cotton yarn prices are still weak. Due to the lack of new orders, cotton yarn trading has improved. limited. The operating rate of downstream enterprises is low, the inventory of gray cloth is at a high level, and the operating pressure of downstream enterprises is great.
Crude oil retreats sharply from highs
The market’s recent pessimistic correction on demand and the sharp strengthening of the US dollar index have triggered a sharp correction in oil prices. After rising to highs, the bull stampede due to lack of liquidity has intensified the volatility of oil prices. In addition, the United Arab Emirates and Iraq expressed their willingness to expand production, amplifying the market’s concerns about the reversal of the supply and demand pattern.
Multiple factors prompted investors to take profits. International crude oil futures prices fell sharply on March 9, plunging more than 10% at the close. As of the close of the day, the price of light crude oil futures for April delivery on the New York Mercantile Exchange fell by $15 to close at $108.7 per barrel, a decrease of 12.13%; the price of London Brent crude oil futures for May delivery fell by $16.84, It closed at US$111.14 per barrel, a decrease of 13.16%.
The US inflation data was released on March 10, and the overall extreme market sentiment has eased. After the geopolitical situation eases, the pace of interest rate hikes by the Federal Reserve will return to the main line of market trading.
Affected by this, on March 10, domestic PTA futures fell to the limit, and fuel oil fell by more than 12%.
Although, almost at the same time, on March 9, local time, the U.S. House of Representatives passed a bill banning Russian oil imports.
The editor believes that the recent volatility of oil prices may gradually converge after fluctuating significantly and reaching a short-term peak. However, considering that OPEC is still maintaining its original production increase plan, and Russia’s external crude oil exports have not resumed, the huge supply-side gap cannot be filled, and the upward trend in oil prices is likely not to be completely over.
The theoretical loss of 1,000 tons per day is 400,000
When the international oil price soared to US$130/barrel, it has to be said that the phenomenon of “flour is more expensive than bread” has already appeared in the polyester industry chain.
On March 8, the processing difference of PTA dropped to -12 yuan/ton. If the cost of acetic acid is added, the processing difference dropped to -156 yuan/ton. This phenomenon made people in the industry exclaim that it has never been seen before in history. PTA has never had negative processing fees.
“The spot processing difference of PTA is negative, which means that after counting auxiliary materials, power and other fixed costs, the average loss per ton of PTA purchased and made now is expected to be 400-500 yuan.” Tianfeng Futures analyst Liu Siqi said that for a daily output of 1,000 For a company that produces 100,000 tons, the theoretical loss in one day’s production is 400,000-500,000 yuan.
It is understood that oil prices have fluctuated greatly recently and have risen at an alarming rate. Under such circumstances, the prices of downstream products have increased more slowly, and PTA processing fees have also hit new lows.
A PTA company with a daily output of 1,000 tons theoretically loses 400,000-500,000 yuan a day.
Negative processing fees are just a short-lived product of the surge in crude oil. If processing fees are maintained at such low levels for a long time, manufacturing companies will face huge losses, which will cause a large number of maintenance and shutdowns on the supply side and increase processing fees, in order to achieve a balanced state in the industry.
At a time when there are concerns about the rapid rise in raw material costs and production’s insufficiency, the sharp plunge in international crude oil prices may bring some comfort to the PTA industry: the rise in raw material prices has finally pressed the “pause button.”
Pure polyester yarn has a small increase, or there is room for supplementary growth
Affected by the international situation, crude oil and polyester raw materials have experienced large fluctuations. The market price of polyester staple fiber mainly followed the trend of raw materials. On March 9, most of the quotations of polyester staple fiber manufacturers in Jiangsu and Zhejiang remained stable, and shipments were discussed. The mainstream of 1.4D was at 8300- 8600 yuan/ton, actual order negotiation intention or self-pickup at 8100-8350 yuan/ton. The market prices of polyester staple fiber in Shandong and Hebei remained stable, the focus of price negotiations dropped slightly, and the quotations of polyester staple fiber manufacturers in Fujian remained stable. The overall production and sales of the factory were at 43.54%, an increase of 10.03% from the previous trading day, and the production and sales atmosphere recovered. There is insufficient confidence in the downstream market. Supply chain companies’ shipment speed is about 1/3 of the same period in previous years. ExportsDownstream cotton yarn prices have weakened again after the price increase, and downstream demand continues to be weak. The market still has certain expectations for the peak season demand from March to April. However, judging from the performance in early March, demand is likely to be sluggish during the peak season. .
The downstream operating rate is relatively weak year-on-year, and the inventories of cotton yarn and gray fabrics are at historically high levels, resulting in greater inventory pressure. Recently, although there are slight signs of improvement in the Nantong and Guangdong markets, the overall transaction volume is average. Many textile companies are still difficult to ship goods. Cotton yarn inventories are high, profits are poor, and cotton purchase willingness is poor.
At present, the price difference between cotton and viscose staple fiber and polyester staple fiber is still at a historically high level. This has also caused downstream textile companies to reduce cotton purchases and increase the use of chemical staple fibers, which also has a certain impact on cotton consumption. Since the launch of new cotton last year, the profits of pure cotton textiles have shrunk significantly compared with blended textiles, and their competitive advantages with pure polyester yarn and rayon yarn have declined. This has led some textile companies to adjust their product structures, and the pressure to replace cotton from chemical fibers has gradually emerged. .
In addition, the foreign trade market is facing a boycott of Xinjiang cotton and its products, and the recovery of domestic cotton market demand has been overshadowed, making it difficult to effectively connect the upstream and downstream of the textile industry. For ginning companies, this is still a difficult decision.
However, we should not be overly pessimistic about the cotton yarn market in the short term. Due to further compression of profits, textile companies maintained a buy-and-use model for raw material cotton and cotton yarn, and industrial inventories fell to a relatively low level. Recently, the terminal apparel industry is holding a spring order fair. Although overseas consumption has peaked, there is still motivation to continue placing orders to replenish stocks. In March, textile companies have a phased demand for raw material replenishment. The “Gold, Three, Silver, and Four” market is expected to slowly start. At that time, there may be a round of restocking, which will still support the price of textile raw materials in the short term.
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