The staple fiber market is booming!
Yesterday, short fiber production and sales changed from the previous sluggishness, and a set of hot data excited the entire short fiber circle. According to CCF statistics, the average production and sales of direct-spun polyester shorts yesterday was 547%. The production and sales of some factories were: 1000%, 1000%, 600%, 450%, 800%, 200%, 300%, 500%, 600%.
The reporter learned that 1000% of production and sales is equivalent to the output of a short fiber factory selling for 10 days a day. Previously, short fiber has also experienced pulse-type high production and sales, but such high production and sales have been extremely high in the short fiber market in the past year. Rare. It is worth mentioning that the popularity of the spot market is also directly reflected in the futures market, with short fiber futures leading the rise in the entire polyester sector. The “hotness” came too suddenly. What happened in the short fiber market?
Stabilization of crude oil increases enthusiasm for downstream stocking
In the short fiber market, there has been a marketing method of “concentrated promotion, promotion and volume” in recent years, but yesterday’s concentrated volume did indeed exceed market expectations.
“The increase in short fiber production and sales is an explosion of demand that has been suppressed for a long time. Low position replenishment is in line with market expectations, but the intensity exceeds market expectations.” Kong Lingfang, senior analyst at Huarui Information, told reporters in an interview.
It is understood that due to the correction in coal prices in mid-October, short fiber continued to fall, and the market waited to digest raw material inventories, resulting in continued decline in shipments from downstream yarn mills and middlemen.
“In the traditional off-season when the downstream industry is relatively sluggish, such high production and sales are indeed beyond market expectations.” Zhu Lihang, an analyst at Zheshang Futures, said that the main reason is that after the United States announced the release of crude oil reserves, OPEC said it would re-evaluate its output strategy. This boosted crude oil market sentiment, oil prices rebounded, and the market was generally optimistic about the future oil prices. On this basis, downstream companies that already need to prepare raw materials for the Spring Festival market launched a wave of centralized stocking, resulting in a boom in short fiber production and sales.
Crude oil prices have stabilized and rebounded, short fiber processing fees are low, and short fiber prices are not high. Downstream consumers are focusing on “buying at the bottom” under the mentality of “buying up, not buying down”. The reporter learned that the current spot and disk processing fees for short fiber are at a relatively low level. Although terminal demand is poor and inventory has continued to accumulate recently, processing fees have not been significantly reduced, which shows that the profit margin is indeed relatively limited. With the absolute price of short fiber on the low side, yarn factories and traditional traders are significantly more motivated to purchase.
“From the perspective of supply and demand fundamentals, with the decline in shipping costs, short fiber exports have improved recently, domestic clothing and textile demand has increased, spring orders are gradually being issued, and as the price difference between polyester and cotton has widened, the substitution advantage of low-priced short fiber has increased, pure Orders for polyester and polyester cotton have improved. In the context of low short fiber external warehouses and traders’ spot shortages, the promotion of short fiber factories has stimulated traders and downstream replenishment needs.” said Chen Sheng, an analyst at Guomao Futures.
High production and sales indicate that there is indeed a demand for replenishment downstream, and it also means that polyester short inventory in factories will decrease significantly. As of the 19th, the average equity inventory of short fiber factories is only 6 days. According to market participants, after yesterday’s boom in production and sales, the average inventory of short fiber factories is expected to drop to 0, and some factories even have negative inventory. The actual inventory of factories is at a low level. .
This round of replenishment or pulse replenishment
Kong Lingfang told reporters that driven by the rebound in crude oil prices, short fiber futures rebounded, and yarn mills and traders concentrated on covering their positions, with large trading volumes, indicating that the market recognized the current absolute price and recognized that the short-term risks in the market have been released. “At present, yesterday’s boom in production and sales is a concentrated outbreak of long-term suppressed demand, including speculative demand. Spinner mills’ orders are average, and there is no willingness to continue to chase increases and replenish positions, so this round of replenishment is most likely to be pulse replenishment.”
In this regard, Chen Sheng also said that the booming production and sales of short fiber has continued the recent rhythm of pulse promotional purchasing of polyester. “From the analysis of purchasing entities, downstream yarn factories purchase raw materials from short fiber factories through traders as the main force of this procurement. Recently, orders for polyester yarn and polyester cotton have been good. After obtaining the orders, the yarn mills quickly locked in the cost of raw materials. As the Spring Festival approaches, yarn mills have a certain need to prepare stocks at low prices. Therefore, the large promotion of short fiber has boosted the downstream willingness to purchase at the right time.”
From a short-term static perspective, the current order and construction situation in the terminal market is still not optimistic, and the market is relatively light. Before there is a significant change in terminal demand, the booming production and sales of short fiber may still be a pulse-type “flash in the pan”, mostly due to the stocking needs of downstream enterprises. The high production and sales of short fiber may not be sustainable for a long time.
However, after this boom in production and sales, the fundamentals of short-term staple fibers will improve at the margin.
“With the centralized procurement of downstream products, the average equity inventory of short fiber factories may drop to 0 or negative inventory. Factory profits with low inventory are expected to rebound slightly.” Tianfeng Futures analyst Liu Siqi said that the continuity of subsequent short fiber production and sales still needs to be paid attention to. Changes in crude oil prices. If crude oil begins to stabilize and support, the terminal willOrders are being issued one after another, and the rigid demand supports the increase in the purchase of raw materials for spinning mills, and the production and sales of short fiber may be maintained.
Pay attention to rebound opportunities after processing fees reach low levels
The booming production and sales are also reflected in the short fiber futures market. Yesterday, short fiber futures reversed their early decline after opening, opened higher and moved higher, strengthening significantly. “Based on the day’s closing price, the increase in short fiber is higher than the increase in raw materials PTA and ethylene glycol, and the profit of short fiber has expanded by about 84 yuan, reflecting the strong fundamentals of short fiber destocking.” Liu Siqi said.
“The increase in spot production and sales of short fiber has pushed the main futures prices higher. The price difference of short fiber 1-5 has risen rapidly, the market profit has been partially repaired, and the market has paid more attention to short fiber varieties.” Chen Sheng said that from a fundamental perspective, short fiber will be short-term in the short term. With the fiber futures disk processing fee reduced to 800 yuan, there is an expectation of profit recovery. The increase in production and sales has contributed to a certain rebound in disk processing profits.
The reporter learned that at present, the recovery of demand in the short fiber market is more reflected in market expectations and has not really taken off. As the Spring Festival approaches, the “gold, three, and silver” market prices may become a hot spot for demand.
“For short fiber prices to truly strengthen, in addition to relying on the strength of cost-end crude oil, it also needs to rely on the recovery of demand. Overall, short fiber processing fees can still be expected.” Zhu Lihang said.
In Liu Siqi’s view, the outlook for the short fiber market needs to focus on crude oil and downstream order placement nodes. “Currently, short fiber is in a state of low inventory and relatively low profits. The short-term fundamentals are driven by the explosion of crude oil or demand. There is still a wave of concentrated stocking at the terminal before the Spring Festival. You can pay attention to the rebound opportunities after short fiber processing fees are low.”
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