Recently dragged down by the decline in crude oil prices and sluggish terminal demand, domestic polyester filament prices have After a brief uptrend, it resumed its downtrend and has now fallen below levels near the end of August.
Oil prices fell to a three-month low, and oil companies have short-term chartered tankers
Oil prices fell to a three-month low this week as coronavirus-induced lockdown restrictions had a lasting impact on major global economies. This has once again suppressed the already fragile demand for crude oil.
Entering the last quarter of 2020, major economies are subject to blockade restrictions and the economy continues to be sluggish. There is widespread speculation that floating storage of oil will increase.
It is understood that oil traders who made huge profits in the second quarter have once again started short-term chartering of tankers, which has triggered speculation that demand will fall again in the fourth quarter of 2020. In this case, the amount of oil stored in the floating tank will increase.
There are rumors that the oil company BP this week leased a VLCC “Gene” built in 2003 for a period of up to six months. Additionally, in early September, commodities trader Trafigura chartered four VLCCs and one Suezmax tanker for six months or less.
Another market trend under this wave of leases is that in the current oil market, the difference between spot and futures prices does not seem to immediately allow floating tank oil storage to be profitable. profit. So-called futures trading occurs when current prices are lower than future prices, and traders can buy crude oil or refined products on the spot market for storage.
Oil prices fell to a three-month low this week amid concerns about continued COVID-19 outbreaks in major economies and geopolitical factors threatening a fragile recovery in global crude demand.
Lloyd’s List data shows that as of the week of September 4, there were 209 ships with oil products stored for more than 20 days, with a storage capacity of 261.8 million barrels. By comparison, data measured at the beginning of June was 311.3 million barrels of oil products stored on 274 tankers. It can be seen that the current oil storage capacity has declined.
In addition, congestion in Chinese ports has also skewed the true number of ships currently carrying oil in floating tanks. Most of the tankers used for futures trading came on six-month leases in April, when oil prices plunged by a third and hit 20-year lows. Before the crude oil and refined product price index showed profitability, the resurgence of short-term charter contracts showed that traders were bearish on the winter market prospects.
According to reports from shipbrokers, the “Yuan Kun Yang” owned by COSCO Shipping Energy has a new lease for six months with a daily rent of US$39,000. It is said that the new ship VLCC currently sailing in Singapore is loading diesel cargo for storage, becoming one of more than a dozen ships in the world storing diesel.
At the same time, another new ship, the Landbridge Wisdom, was chartered by the British oil company BP two months ago and was used to transport Diesel arrives in the west. But for the past two months, the ship has been operating as a floating warehouse in the west. Currently, the ship has just set sail from there to Mongstad. It is understood that it will ship the first crude oil cargo at Mongstad.
According to data from the ICE Futures Exchange in London, front-month Brent crude oil contracts and 5 The price difference between the monthly contracts is $2.72 per barrel. The price weakly supported crude oil futures trading. But for low-sulphur gasoline, the difference is much larger at $44 per ton, a figure that suggests such deals can be lucrative, with the main influencing factor being the charter rates of the vessels. level.
Contango trading protected major oil companies and traders from huge losses in early 2020 as they took advantage of oil price swings and took action. Tracking reports found that shipbroker Fearnleys pointed out in a market report that two scenarios may occur in the market in the next few months.
A not-so-good scenario is that if oil demand performs worse than expected, the market could see another round of floating storage, as onshore inventories remain high. If so, after a short-term increase, rents will enter a longer period of lower prices.
The recovery of the foreign trade market is hindered, and downstream inventories are still high
On the 7th, the General Administration of Customs released data. From January to August 2020, the cumulative exports of textiles and clothing were US$187.407 billion, an increase of 8.11% (the national export of goods trade decreased by 2.3%), of which textile exports were US$104.798 billion. An increase of 33.43%, the export volume hit the highest level in the same period in history; clothing exports reached 82.609 billion US dollars, a decrease of 12.86%, the export volume hit the lowest level in the same period in the past ten years.
The growth in textile exports is largely due to the fact that masks and other anti-epidemic materials are still the main driving force of exports. Looking at the breakdown, the improvement in the fabric and clothing markets is still not obvious. Trader Mr. Shi said: “At present, our company’s foreign trade market has not recovered. This year we mainly focus on domestic sales, and the order volume has decreased by at least 2/3 compared with the same period in previous years. Foreign trade orders have not been moved, and there are only a few in the market.” Suppliers that prefer brand names are slightly better at selling goods, but overall they are still not good.”
Judging from the cancellation of autumn orders and frequent bankruptcies of most well-known brand clothing companies this year, life is not easy for brand companies, let alone other small and medium-sized clothing companies. Clothing companies currently have very limited demand for fabrics, especially autumn clothing, which can be replaced by spring clothing. Under the situation of high financial pressure, clothing companies mostly focus on digesting inventory. Therefore, clothing companies have reduced their demand for gray fabrics and fabrics, and it is difficult for weaving companies to reduce their inventories. Currently, the inventory of gray fabrics in Shengze area remains at around 45 days, making it difficult to destock.
In addition, demand finally recovered during the traditional peak season “Golden Nine”. But the real situation does not seem to be the case. The sales of more conventional products such as weaving-end pongee, polyester taffeta, nylon, and imitation silk are still weak, and the phenomenon of selling goods still exists.
Front spinning cash flow loss Seriously, polyester filament “Golden Nine” has passed the “difficulties”!
The sharp decline in crude oil has obviously dragged down the mentality of polyester filament market participants, and under the current circumstances, the terminal market has only improved partially, and the overall market is still relatively large compared with last year. The overall market demand for polyester filament is relatively average. Under this drag, the trading atmosphere of the polyester filament market continued to be weak.
At the same time, facing the highest inventory of gray fabrics in history, it is not enough to just level production and sales. The recovery speed of the operating rate of weaving enterprises is not as fast as expected. At present, the looms in Jiangsu and Zhejiang are The operating rate only recovered to about 70%. At the same time, the operating rate of polyester equipment was as high as 92.1%. The operating rate of the loom is so low, but the polyester device is still running as usual, so the extra silk will naturally become inventory.
Under the situation of weak production and sales and inventory accumulation, the center of gravity of polyester filament continues to decline. It has now fallen below the low level near the end of August.
At this time, although the front-end cash flow is more serious than the back-end loss, but At this time, the price decline of front spinning is significantly greater than that of back spinning. The main reason is that the demand for DTY for autumn and winter fabrics is relatively good at this time, which also makes the recent production and sales of DTY relatively better than POY and FDY.
In the later stage, although there are expectations for a certain improvement in subsequent terminal orders, the extent and duration of the improvement are still not optimistic, and at this time, although the inventory of gray fabrics in terminal factories is lower than that during the year The high point has dropped significantly, but the overall price is still at a relatively high level, and as the National Day holiday approaches, weaving factories have certain holiday plans in the later period. If the terminal’s replenishment of polyester filament is not as expected at this time, the profit will be poor and the inventory will Under the cumulative situation, it is expected that the load and center of gravity of polyester filament in the later period will be difficult to be optimistic. </p
