2020 can be described as the “darkest moment” for the polyester industry chain. The production cycle is superimposed on the impact of the epidemic, and prices in all links of the industry chain have dropped to historical lows. Under the pattern of oversupply and high inventory in the entire industry chain, almost There is no hope. However, after the National Day holiday, the polyester industry chain rebounded under the guidance of downstream companies. Especially since the launch of polyester staple fiber futures in October, it once rose by 20% within 6 trading days, which seemed to have brought a lag to the stagnant polyester industry chain. A touch of energy. Although short fiber futures have gradually risen and fallen since then, they still maintain a relatively strong position.
Fundamentals: The production cycle amplifies short-term demand
From a fundamental perspective, the polyester short-term market has been in a state of strong supply and demand recently. It can be seen that the operating rate of short fiber factories is close to full, the inventory has been reduced rapidly, and even oversold conditions have occurred. At the same time, the start-up of downstream looms has also reached a historical high and is close to full capacity. The inventory of gray fabrics is still at a high level, but it is also in the process of being eliminated. It can be seen that the entire supply part of the short fiber link has been completely tightened, and it is difficult for the supply side to show greater elasticity. Therefore, the core logic that determines the short-fiber market in the near future lies in the real situation on the demand side.
As for the demand side, the market told several stories before and after the National Day. The first is about the short-term rapid growth in demand caused by the transfer of orders from India. However, the number of new confirmed cases in India has been declining month-on-month since September, and the marginal impact of the second epidemic has gradually diminished. Judging from some macroeconomic data, India’s economy is still in a significant improvement stage, and the manufacturing PMI in October continued to strengthen month-on-month. Therefore, the view that India will shift a large number of orders to China due to the epidemic is untenable. Even if it is true that some Indian orders cannot be produced and are transferred to China, considering that India’s textile exports only account for about 20% of China’s, and the proportion of polyester fiber is quite low, such an order transfer should have little impact on the supply and demand of China’s polyester fiber market. big.
Another story comes from the weather. Recently, there were rumors that 2020 will usher in the “coldest winter in 50 years”, which has stimulated a number of restocking behaviors due to the need for cold protection. It can be seen from the weather cycle data indicators that in the context of the rapid shift to the La Niña cycle in the second half of 2020, there are indeed prediction indicators for a cold winter, but the actual situation is still uncertain, and the specific impact on the textile and clothing industry should not be too much. expect.
The key to the surge in domestic demand lies in the changes in the production cycle of textile and garment enterprises. Under normal circumstances, winter orders for clothing and home textiles are generally placed between June and July, and then upstream textile companies complete the production of the orders in the third quarter. However, due to the epidemic this year, terminal companies were relatively cautious in placing orders in the early stage; however, with the unexpected recovery in consumption from the end of September to the National Day holiday, coupled with the cold winter expectations and the “Double Eleven” hype, many textile and clothing companies urgently placed orders for winter clothing in October. , hoping to catch the last wave of consumption peak. This resulted in the original production cycle of the entire third quarter being compressed to a few weeks in October, and the short-term downstream demand in the industrial chain exploded rapidly.
Disk: Capital intervention amplifies liquidity problems
From a disk perspective, the intervention of non-industry funds has greatly amplified the short fiber futures situation. A rally. The first short fiber futures contract is still far away, and the peak of new short fiber production capacity will begin in the second half of 2021, resulting in a relatively abnormal inverted V-shaped term structure for short fiber. The 05 contract has become a price high point, and for a time The spot water premium reached 500-600 yuan/ton, which resulted in a large number of arbitrage funds involved in futures and spot arbitrage, further pushing up prices. The intervention of arbitrageurs amplified the liquidity problem of short fiber. When short fiber has entered a low inventory state, external funds purchased spot goods, causing downstream manufacturers to be further cautious. As a result, market transactions were sluggish and prices fell rapidly in the following days. On the other hand, during the decline in mid-to-late October, disk processing profits did not decline. As the fundamentals of short fiber are better than those of the upstream raw material end PTA, the decline in short fiber prices is more conducive to further expanding processing profits on the market, which also provides certain support for the price of the 05 contract.
In summary, the early market price of short fiber was driven by emergency replenishment of downstream stocks, and the existence of speculation and arbitrage funds amplified the volatility. The current level of short fiber processing fees is relatively good, and it is difficult to reduce prices by compressing processing fees in the short term. The fundamentals of the short fiber 05 contract are good, and there will be motivation to return to the Backwardation structure in the future. The market outlook will focus on the continued demand after the Double Eleven market. </p
