On the first day after the Spring Festival, affected by the sharp rise in crude oil during the holiday, the polyester sector showed strong trends, with staple fiber and ethylene glycol rising by their daily limits, leading the chemical sector. The reporter observed that on the first trading day after the holiday, polyester chain futures prices rose sharply across the board. Among them, ethylene glycol and short fiber futures were closed at the daily limit, closing at 4,986 yuan/ton and 7,734 yuan/ton respectively. The prices have hit their highest levels since last year. new high. PTA futures rose relatively less, but also increased by 4.17%. The performance of the polyester “Brotherhood” yesterday impressed many people in the industry, saying it was “awesome”!
Short fiber fundamentals are still the strongest
In addition to the impact of the sharp rise in crude oil prices during the Spring Festival Driven by the cost side, good supply and demand are also the main reasons for the sharp rise in prices.
“From the perspective of the fundamentals of short fiber itself, the supply and demand pattern is relatively good, and the overall situation of high-profit negative inventory is maintained.” Dadi Futures analyst Jiang Shuopeng said that during the Spring Festival, short fiber The operating start-up remains above 80%, which is significantly higher than in previous years. However, short fiber factories are generally in the negative inventory stage, and some major mainstream factories are oversold by about 40-50 days. Therefore, there is accumulated inventory pressure due to downstream holidays during the Spring Festival. It is not big for short fiber companies.
Judging from the current recovery situation of downstream spinning mills, the overall situation is ahead of schedule compared with previous years, and the order status is also relatively satisfactory. Therefore, the increase in short fiber prices is also expected from the demand side. Produced a promotion effect.
In this regard, Longzhong Information analyst Xiang Hongjiao also confirmed that although there was a slight accumulation trend during the Spring Festival holiday, the sharp rise on the first trading day after the holiday once again promoted factory orders. increase.
In her opinion, the resumption of work in the downstream this year is earlier than the same period in previous years. Some cotton mills in Changle, Fujian have already started work on the fourth day of the Lunar New Year, and by the seventh day of the Lunar New Year, the local operating rate has reached 60%-70% % level, but in previous years, the spinning mills would not start operations until the eighth or even the fifteenth day of the Lunar New Year, and the domestic and foreign trade orders of the spinning mills were supported.
According to reports, the shortage of containers that restricted foreign trade orders in the early stage has gradually eased, and most yarn mill orders can be executed until late March. Yarn prices also generally rose after the holiday. On the first trading day after the holiday, the price of pure polyester yarn in Changle increased by 800 yuan/ton to 12,600 yuan/ton compared with before the holiday. Therefore, this rise is the result of upstream and downstream resonance.
“The fundamentals of short fiber are still the strongest in the polyester industry chain, and there are fewer productions this year, and subsequent performance will still be strong.” Zheshang Futures Analyst Zhu Lihang said that as far as short fiber is concerned, the low inventory of short fiber has strong support for prices. The price of short fiber is easy to rise but difficult to fall, and the resumption of work in the downstream of short fiber is expected to be better than in previous years. “Downstream weaving companies have more orders and production schedules. I heard that most factories have already scheduled production after March and April, and subsequent demand continues to be promising.”
“In the future, mainstream manufacturers will The oversold phenomenon is serious, and the negative factory equity inventory may continue until April to May. Therefore, from the perspective of supply and demand fundamentals, direct-spun staple fiber still has the power to continue to rise.” Xiang Hongjiao said.
Jiang Shuopeng believes that the fundamentals of short fiber itself are ideal, and at the same time, the sharp rise in costs and the recovery of downstream demand have led to the price of short fiber futures continuing to hit new highs. Overall, short fiber is still It will be easy to rise but difficult to fall.
Ethylene glycol is expected to hit the daily limit
The reporter learned that since the fourth quarter of last year, ethylene glycol has The overall performance of alcohol is bottoming out and rising. Among them, the EG2105 contract started to rise after testing 3,750 yuan/ton in mid-November, reaching the 4,800 yuan/ton level in early February, an increase of more than 1,000 yuan/ton. On the first trading day after the Spring Festival, it gapped higher and opened at 4,986 yuan/ton, opening at the daily limit. In the afternoon, it hit the daily limit again and closed at the daily limit.
In this regard, Pang Chunyan, an analyst at SDIC Essence Futures, explained that overall, the cost-driven double bullish resonance caused by continued destocking and rising oil prices since the fourth quarter has led to ethylene glycol Price action is on the strong side.
It is understood that the continued strength of crude oil prices has driven up naphtha prices, with Brent crude oil prices rising from US$43/barrel in mid-November to over US$63/barrel. The increase was about 46%, and naphtha rose nearly 48% during the period. In addition, port inventories continue to decline. According to CCF statistics, East China ethylene glycol port inventories have continued to decline from more than 1.2 million tons at the end of October to less than 700,000 tons before the Spring Festival.
During this period, due to domestic production increases, import recovery and other reasons, the port inventory of ethylene glycol is expected to rebound again in early 2021. However, foreign device maintenance, high port shipments, etc. The reason is that the expected accumulation of ethylene glycol has been difficult to realize. During the Spring Festival, oil prices performed strongly, and the extremely cold weather in North America caused the shutdown of many local units. Cost and supply bullishness once again resonated, making ethylene glycol perform well after the holiday.
Ethylene glycol performed poorly in the first half of 2020. On the one hand, oil prices hit a record low, and on the other hand, the epidemic affected consumption. The flow of global ethylene glycol cargo to the Chinese market caused domestic ports to Inventories continue to rise, causing the ethylene glycol market to become the worst-performing product in the industrial chain.
“Low profits have caused a decline in the start-up of domestic equipment. In the second half of the year, maintenance of foreign equipment increased, European consumption recovered, and foreign spot goods flowed to the European market with higher prices, resulting in a sharp contraction in imports. And the downstream gathering The start-up of esters has improved significantly, especially the intensive outbreak of orders at the end of September and early October last year. The supply and demand pattern has changed, and the high port inventory of ethylene glycol has gradually been digested. At the same time, as the global epidemic control situation improves,Prices continue to strengthen. “Pang Chunyan said that boosted by the dual benefits of supply, demand and cost, ethylene glycol prices have reversed their decline.
Imports are low and remain strong
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It is understood that low imports are one of the main reasons why ethylene glycol prices remain strong.
“In the first half of last year, ethylene glycol prices continued to rise. After the sharp drop in alcohol prices, low profit or even loss of cash flow caused the start-up of domestic equipment to fall again and again, and the space for continued decline is limited. The improvement on the supply side in the later period mainly came from the reduction of imports, which has always led to the continuous reduction of port inventory. “Zhu Lihang said.
Data show that in October last year, ethylene glycol imported 740,000 tons, a year-on-year decrease of 8.1%. In November, ethylene glycol imports were only 625,000 tons, a year-on-year decrease. 21%. The import volume of ethylene glycol in December was 550,000 tons, a sharp decrease of 40% year-on-year. The sharp contraction of imports in the fourth quarter led to the continuous destocking of ethylene glycol ports, which is one of the important reasons for the strengthening of ethylene glycol prices.
The latest data released by CCF yesterday showed that the inventory of ethylene glycol at the East China port was 683,000 tons, an increase of 1,000 tons from the pre-holiday period. The situation of significant inventory accumulation during the Spring Festival in previous years has not occurred. ” On the one hand, the import volume arriving at the port is not high. The arrival forecast in January is about 700,000 tons. As of February 17, the arrival forecast in February is only 433,000 tons. Before the holiday, the weekly shipment volume of ethylene glycol in Zhangjiagang reached 70,000 to 80,000 tons, far exceeding the level of 40,000 to 50,000 tons in the same period of previous years. “Pang Chunyan said that the arrival volume at the port is low, but the shipment volume is high, resulting in the backlog of ethylene glycol port inventory due to the Spring Festival.
In Jiang Shuopeng’s view, 2 At the beginning of the month, the ethylene glycol plant in the Middle East was inspected for maintenance, further lowering the forecast for ethylene glycol imports in the first quarter. The supply gap caused by the import volume caused the ethylene glycol inventory to change from overstocking to destocking in the first quarter.
During the domestic holidays, affected by the extreme weather caused by the cold wave in North America, the power system of ethylene glycol plants in the United States was seriously affected. Currently, many ethylene glycol plants in the United States have been shut down, with a total production capacity of around 2.9 million tons. The restart time of some devices is yet to be determined. Calculated based on one week of shutdown, the supply loss is expected to be around 50,000-60,000 tons. It is expected that the overall import recovery in the first quarter will still be slow, and the import volume will remain at a low level before April.
“At present, due to the large number of overseas equipment maintenance and the large price difference between northwest Europe and domestic prices, imports in the first quarter are still expected to be low, and during the Spring Festival, the United States was affected by the winter storm. Multiple units were forced to shut down, affecting production capacity by more than 3 million tons, further reducing import expectations in April and May. “Zhu Lihang said.
It is worth noting that as the price of ethylene glycol rises, the resumption of production of coal-to-ethylene glycol units has been promoted, and the load has increased from 51% in mid-January. It rose to 58.76% before the holiday, and the total ethylene glycol load increased from around 60% to 71.4% before the holiday, but the overall load was still unable to offset the downturn at the import end. “The temporary shutdown of North American equipment during the Spring Festival plus the maintenance of multiple overseas equipment in early February , it is expected that import volume will still recover slowly in the first quarter and remain at a low level. “Jiang Shuopeng said.
How much momentum does ethylene glycol have to rise in the market outlook?
From now on Judging from the current situation, ethylene glycol will remain strong in the front-month contract and spot markets, and the core logic still revolves around the continued reduction of inventory and the firmness of cost-end oil prices.
” From the demand side, polyester maintenance during the Spring Festival was less than the same period last year. After the holiday, polyester plants are expected to resume work one after another. By March, the polyester load can return to more than 90%. Downstream terminals are expected to recover normally, and there are overall positive expectations. “Jiang Shuopeng said that from the balance sheet, it is expected that ethylene glycol will still maintain the logic of destocking in the first quarter, and is expected to continue to be destocked in March. In the future, we need to pay attention to the commissioning of new domestic ethylene glycol devices, especially in the later period of satellite petrochemicals. If the Hezhe petrochemical plant is put into operation smoothly, it will be able to make up for the loss in imports, and the supply side may be effectively rebounded.
The current oil price has risen to more than 60 US dollars per barrel, and the market outlook will be different. The trend will continue to affect the chemical market, dominating the price focus of the polyester sector, but another factor that has a greater impact on prices is still supply and demand.
“Downstream consumption is relatively strong before the holiday. Optimistically, the preference situation will continue to be boosted by the rise in oil prices after the holiday, so domestic supply and demand are expected to maintain a prosperous situation. However, the focus of the market may be on oil prices, because rising oil prices drive up costs and stimulate downstream stocking and consumption. However, once oil prices adjust and the downstream market atmosphere weakens, it will inevitably lead to deep adjustments in the market. Pang Chunyan said.
Xiang Hongjiao believes that although market expectations are still positive, we must be wary of the potential substitution risk that may arise from the widening price difference between recycled staple fibers and fiber-grade chips. .
Similarly, in Zhu Lihang’s view, the current disk profit of PF05 is close to a high of 1,500 yuan/ton, exceeding the highest value of short fiber spot profits in history. It is still necessary to be cautious when chasing higher. .
“As far as the market outlook of the polyester sector is concerned, the 2105 contract, especially the first quarter, will be the strongest period for polyester this year. After the second quarter, with the new supply of ethylene glycol and PTA With a large amount of production capacity put into production and the supply and demand pattern weakening, it will be difficult for prices to drive a sharp increase. “Zhu Lihang said.
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