[Introduction] Recently, there was news that the Jiangsu Electric Power Company, Sub-district and Provincial Development and Reform Commission issued the latest notice, suspending the rolling power rationing policy, and the new power rationing plan will be notified separately. Recently, the operating rate of adding electricity in Taicang, Jiangsu has increased slightly, and the market has over-interpreted it. Due to the loosening of the power restriction policy in Jiangsu, some industry players believe that as the policy is loosened in stages, market supply will increase, and the trend of polyester filament yarns will have downward risks.
At the end of October, news spread like wildfire about the cancellation of rolling blackouts and power rationing in Jiangsu. It is rumored that further notifications from the government will be made after the 27th of this month. At present, Market participants mostly interpret that there will no longer be power rationing in Jiangsu, and there is currently a significant increase in texturing operations in Taicang, Jiangsu. Therefore, most people in the market believe that as the power restriction policy is relaxed, texturing, weaving, printing and dyeing operations will gradually resume, and supply will increase one after another. , the tight spot supply situation in the market will also be alleviated, which is negative for the trend of polyester filament to a certain extent.
Figure 1 Comparison of domestic polyester filament price trends from 2018 to 2021
Source: Longzhong Information
As shown in the figure above, since the fourth quarter of 2021, domestic polyester filament prices have fluctuated and risen, far exceeding 2019-2020 Prices for the same period last year, while the continued rise of polyester filament has also triggered downstream resistance. Production and sales have continued to be sluggish, and the inventory pressure of some varieties has slowly increased. Some market negotiations have shown signs of loosening at the beginning of the week. The current focus of POY150D/48F negotiations is 8800-9025 yuan/ tons, the focus of high- and low-end negotiations has shifted slightly downward to 25-50 yuan/ton.
Figure 2 Comparison of chemical fiber weaving and texturing start-up in 2021
Source: Longzhong Information
At present, the negotiations on polyester filament have shown signs of loosening. Will polyester filament stop rising and enter a downward channel in the fourth quarter? At this stage, the upward trend of polyester filament mainly comes from the tight supply problem caused by cost support and production restrictions. Specifically, the polymerization cost is currently around 6,600-7,100 yuan/ton. The dual raw materials are also gradually consolidating and running, and intraday fluctuations are not stable. Large, cost-side support gradually weakens. From the demand side, the current dyeing fee prices are increasing. However, weaving companies have great resistance to raising prices. The price of gray fabrics is at a relatively low level. The current profit level is average and the enthusiasm for production is not high. Even if the power restriction policy is relaxed, the overall weaving operation is still at a low level. Although some manufacturers currently report increased demand for winter orders, the average number of terminal weaving order days at the end of the month was 27.61 days, an increase of 1.11 days month-on-month, but a decrease compared with the same period last year 10.39 days. In the short term, polyester filament may be given certain positive support, but after mid-November, as winter clothing orders are delivered one after another, the market demand for polyester filament will gradually decline. Taking a comprehensive look at the long-short game in the polyester filament market in the fourth quarter, overall the negative news gradually gained the upper hand after November, and there is a certain expectation of a correction in the market.
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