Beginning in March this year, under the influence of the COVID-19 epidemic and the beginning of a price war between oil-producing countries, crude oil prices began to plummet. By April, there was even a negative oil price for the first time in history. Under the influence of oil prices, polyester raw material prices have also begun to fall below historical lows, and because demand has not improved, polyester raw material prices have continued to remain low.
For polyester companies, whether in terms of profit or destocking, raw material prices have been The low situation is not conducive to the production and operation of polyester enterprises. Therefore, starting from April, whenever there is a disturbance in the market, the polyester market will immediately react and start to rise, but this rise has always lacked continuity.
The recent resumption of work and production in Europe and the United States has led to the continued recovery of international oil prices. The polyester market has also taken this opportunity to break through the “low price trap”. However, with this round of The basis for the price increase – after international oil prices began to fall, this round of “price breakout” came to an end.
Upstream kinetic energy has failed, downstream has encountered bottlenecks, and the “price breakthrough” in the polyester market has come to an end
Whether prices can rise, oil prices may be an important factor, but the most important thing is terminal demand. However, the recent recovery in demand has encountered two bottlenecks.
1. Foreign trade: The “retaliation” of global consumption may be difficult and unexpected, and textile and clothing companies are cautious in placing orders for production
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my country’s textiles have always been a “two-legged” situation of domestic trade and foreign trade, but this year’s sudden epidemic has dealt a very heavy blow to these two aspects.
Europe is an important textile and clothing consumption area in the world. In the emerging textile and clothing industry area – the spread of health and safety incidents in Southeast Asian countries, future textile and clothing trade orders will gradually tend to flow back into the country. This will indirectly boost demand for domestic polyester products. However, judging from the partial resumption of work in various countries, the lifting of port blockades, the restoration of free trade, and the rebound in consumption of residents in various countries, it is obviously not a fast process. At the same time, in mid-May, from the perspective of the production cycle, future textile fabric orders will be final orders in the autumn and Winter orders are the main force. Considering the possibility and expectation of “retaliatory” domestic and even global consumption in the second half of the year, service companies above designated size will also be cautious in placing production orders and try to control clothing inventory pressure as much as possible against the background of economic downturn. At the same time, at the plenary meeting held in Strasbourg, France, on February 12, 2020, the European Parliament voted to formally approve the Vietnam-EU Free Trade Agreement (EVFTA). Once the EVFTA agreement officially takes effect, the EU will cancel The 85.6% tariff on Vietnam is equivalent to 70.3% of Vietnam’s exports to the EU. Seven years after the agreement takes effect, tariffs on 99.2% of tax items will be eliminated, equivalent to 99.7% of Vietnam’s exports to the EU. As for textile and apparel products, as one of Vietnam’s advantageous export products, it will create a certain degree of order competition and diversion for China’s textile and apparel exports to the EU. It is expected that after the global control of health and safety incidents in the second half of the year, it will form a relatively large number of Chinese textile and apparel exports. Big impact.
2. Place your hopes on foreign trade orders, but unfortunately the market has entered the off-season!
It is now late May. According to the rules of previous years, orders for spring and summer fabrics have basically come to an end. The market is about to enter the off-season. As time comes to September and October, Autumn and winter fabrics begin to occupy the market, and the market will become hot again. The consumption of textiles has a strong seasonal pattern. After the season has passed, it is difficult to have “retaliatory consumption” after that. Therefore, when the market enters the off-season, it is difficult for demand to rise in a short period of time.
In order to more truly reflect the recovery of orders in the polyester terminal industry, a platform recently targeted various downstream links in the polyester terminal industry – weaving, yarn, printing and dyeing, textile clothing, home textiles, etc. A number of key manufacturing companies in China have issued special questionnaires on the recovery of orders. According to the survey, the overall finished product inventory of companies in the downstream link is high and order performance is poor. In the later period, more than 70% of the companies surveyed will pin their hopes on foreign trade orders. , and most companies believe that foreign trade orders will begin to pick up around early or mid-June.
(1) The company’s current finished product inventory status
According to the questionnaire It shows that 32.4% of the surveyed companies currently have finished product inventory levels of 30-40 days, 23.5% of the surveyed companies have finished product inventory levels of more than 40 days, 17.6% of the surveyed companies have finished product inventory levels of 10-20 days, and 14.7% of the surveyed companies have finished product inventory levels of 0-10 days, and the remaining 11.8% of surveyed companies have finished product inventory levels of 20-30 days. It can be seen that the current overall inventory levels of factories in various downstream links are relatively high, with more than half of the surveyed companies having finished product inventories of more than 30 days.
(2) The company’s current raw material inventory status
According to the survey results, the raw material inventory of each enterprise is concentrated in 10-20 days, accounting for 41.2%, followed by 30-40 days of raw material inventory, accounting for 20.6%, raw material inventory The proportion of companies with 20-30 days of raw material inventory is 14.7%. The remaining companies have different raw material inventory levels. The proportion of companies with raw material inventories of 0-10 days and more than 40 days is both 11.8%.
(3) Order improvement
The results of the questionnaire show that most companies’ orders in May only improved by 0-30% compared with April. The specific data are as follows: 38.24% improved by 0-10%, and 10%-30%. The proportion of companies that improved is 32.35, the proportion of companies that have improved by 30%-60% is 17.65%, the proportion of companies that have improved by 60%-90% is 8.82%, and only 2.94% has improved by more than 100%. .
(4) Enterprises in various links have responded to orders in June Expectations
In the survey questionnaire, there were 41.7 responses to the question “Based on the production process and understanding you are in, it is expected that orders in June will change compared with May.” % of companies have optimistic expectations and believe that orders will show a growth trend in June, but 29.4% of companies still believe that there will be a downward trend, and 23.5% of companies have a conservative attitude and believe that a stable trend will be maintained.
(5) Main factors affecting orders
According to the survey results, 70.6% of the companies believe that the improvement of foreign trade orders will be the main reason for the different performance of the production process. Only 29.4% of companies pin their hopes on domestic trade orders.
(6) Estimated time for order improvement
On the issue of estimating the time node for order improvement, various downstream companies have different ideas. Among the surveyed companies, 14.7% and 26.5% believed that orders would improve in early and mid-June respectively. In addition, 32.4% of companies still believed that a turnaround in order improvement would occur later.
To sum up, the early release of demand for polyester filament mostly relied on the release of favorable factors from the upstream raw material end, thus stimulating textile companies to passively bargain for replenishment. In the absence of official recovery of terminal orders, polyester factories only The inventory will be transferred to textile companies in stages rather than ultimately being digested to the end consumer. From the perspective of healthy transmission of demand throughout the entire industry chain, the release of terminal demand will ultimately drive demand recovery throughout the industry chain. Therefore, terminal textile and apparel orders, especially export trade orders, will be the most important opportunity to reverse the polyester and textile industry in the future. Among them, EU countries, as important consumer places for Chinese textile and apparel, have recently been increasingly vocal about resumption of work, and have naturally become the focus of the polyester chemical fiber market. primary focus. The control situation of health and safety incidents in European and American countries directly determines the progress of their own enterprises’ resumption of work and consumption recovery, which in turn directly affects their import and export trade. </p
