This week, there has been a large-scale market turmoil in polyester raw materials. The reasons behind this are mainly due to the raging overseas Omicron virus strain and the impact of the unblocking of the epidemic in Zhejiang, China.
The spread of the new coronavirus variant Omicron
Causing crude oil to collapse again
The current rapid spread of the Omicron strain has obviously exceeded previous market expectations and has also introduced new variables in the global vaccination plan. According to a report from the World Health Organization on the 18th, 89 countries and regions around the world have reported cases of Omicron infection of the new coronavirus variant strain; in areas with community transmission cases, the virus spreads at a rate of “doubling the number of cases within one and a half to three days.” “.
The spread of the new coronavirus variant Omicron has caused crude oil to collapse again! On Monday, international oil prices fell sharply, with the main WTI crude oil contract falling by more than 6% at one point!
As the source product of the polyester market, crude oil naturally plays a guiding role in the market. The correlation between PTA and crude oil has always been relatively strong. Coupled with the recent low profits of the entire industry chain, PTA prices and crude oil will show a stronger correlation. Once cost-side oil prices fall sharply, PTA prices will inevitably fall back sharply.
From the perspective of PTA fundamentals, PTA equipment maintenance remained at a high level in December, and the basis was relatively strong under the destocking pattern. However, affected by factors such as the epidemic in many places in East China, weak demand, insufficient natural gas, and local environmental inspections, gathering Some areas of ester and terminals were put on holiday ahead of schedule, and the load dropped further.
Zhenhai is unblocked, and transportation of polyester raw materials is expected to be smooth
The relationship between supply and demand has been eased
On December 19, Ningbo City held a press conference on the prevention and control of the new coronavirus epidemic. At the meeting, it was announced that starting from 15:00, the city’s emergency response level would be adjusted from Level I to Level II emergency response, and the blockade of Chujiochuan Street in Zhenhai District would be lifted. and temporary closed management outside the control area.
Ningbo is an important port city on the southeast coast of China and the economic center of the southern wing of the Yangtze River Delta. Ningbo Zhoushan Port’s annual cargo throughput ranks first in the world, and its container volume ranks among the top three in the world. Zhenhai District has the largest liquid chemical terminal in the country, with an annual throughput capacity of over 5 million tons. In addition, it also has the largest refining and chemical company in the country, Zhenhai Refining and Chemical, with an annual oil refining capacity of 25 million tons and an ethylene production capacity of 1 million tons. The sudden epidemic in Ningbo and the imbalance between supply and demand have also provided certain support for polyester raw materials. At present, it is reported that Zhenhai District has opened a green channel for three types of enterprises, including petrochemical companies that are facing supply chain interruption, huge compensation for emergency foreign orders, and load reduction operations, and implemented a temporary pass management system to enter and exit Zhenhai District. As of the 19th, a total of 51 companies in the region have resumed production and 6,910 employees have resumed work.
Petrochemical products from Zhejiang Dafeng Petrochemical, Zhenhai Refining and Chemical, LG Yongxing Chemical and other companies located in Zhenhai District, Ningbo will also gradually resume transportation! The transportation of polyester raw materials is expected to be smooth, and the supply and demand relationship originally caused by the epidemic will be alleviated, and the corresponding demand support will no longer exist.
The market is about to enter the seasonal low season of demand
Cost and supply and demand double kill
The polyester industry chain will also fluctuate and fall
For the polyester market, due to insufficient upstream support and sluggish downstream demand, the market is expected to enter the seasonal low season of demand from January to February next year. The supply and demand pattern of polyester raw materials is facing seasonal accumulation pressure, and is weak on both the cost and supply and demand sides. Against the background of the epidemic, the entire industry chain will fluctuate and decline again.
At the same time, the continued spread of overseas epidemics is another serious impact on textile foreign trade companies. According to reports from enterprises, while domestic orders have been significantly reduced, export orders are also facing decline or cancellation, and logistics is hindered and the pressure is huge.
According to relevant surveys, most downstream companies have no orders to make, and poor demand has become the biggest obstacle to the development of the entire market. From foreign trade orders to domestic trade orders, there was insufficient follow-up, and the market suffered a heavy setback. The lack of orders has caused the inventory of downstream manufacturers to continue to accumulate. The inventory of woven gray fabrics in Jiangsu and Zhejiang is about 32.5 days. The inventory is rising and the market is not good. The inventory of downstream manufacturers is likely to continue to be high in the year ahead.
At present, the market is in a dilemma, with insufficient cost support.��, the terminal demand is average, and there is currently less than a month left before the textile workers have a holiday. Holiday notices and work stoppage notices have become commonplace, and in January, everyone in the industry said that they can rest and recuperate. The impact on the cost side is not enough to stimulate the market, and the rise and fall of prices are not that important. Nowadays, demand is the “kingdom”. The trend of overseas epidemics remains the same, and many countries have begun to close down their countries again but are still moving forward cautiously. Without a boost in foreign trade, domestic production and sales will not be optimistic, and the reduction in orders may continue.
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