After a period of downturn, international crude oil prices rebounded sharply. As the market expects that a global crude oil production reduction agreement will be reached next week, oil-producing countries may implement production cuts equivalent to approximately 10%-15% of global demand. Last week, U.S. oil rebounded by more than 30% in retaliation, and Brent crude oil futures also surged by more than 20%, both recording the largest weekly percentage gains in history.
“Speculative bargain hunting” drives the market Silk market
Against the backdrop of a sharp rebound in crude oil this week, speculative demand for polyester has increased significantly, and polyester filament inventories have been significantly reduced. After a round of speculative purchasing around the Tomb Sweeping Day holiday, the pressure on polyester factories to reduce production is no longer there, and there is even the possibility of an increase in some areas. In addition to the reduction in inventory pressure, the price increase has brought about better cash flow recovery. On the two days from April 4 to May 5, the comprehensive price increase of polyester yarn is estimated to be above 400 yuan/ton. Superimposed on the 3rd day of around 250 yuan, the comprehensive price increase of polyester yarn has reached above 650 yuan, and the increase in some specifications has even exceeded 1,000 yuan. Overall, Looking at POY, the increase is approximately close to 15%. In terms of polyester factory inventory, compared with the previous POY inventory of 31 days, FDY inventory of 30.5 days, and DTY inventory of 33.2 days, polyester inventory fell sharply this week to a level of 15-22 days.
In terms of raw material procurement, with the emergence of ultra-low prices for filament yarns and news of crude oil production cuts, downstream speculative demand has increased. Many of them are even speculative entry of OTC funds. On April 2, polyester yarn production and sales in Jiangsu and Zhejiang increased to 300% in late trading. On April 3, production and sales continued to increase to 240%. During the Tomb Sweeping Day holiday on April 4, production and sales exceeded 340%. Some factories closed their stocks early and were reluctant to sell. The stocking of terminal texturing and looms is not uniform. In particular, some factories have weak expectations for absolute demand, and the procurement operations are differentiated. Those with large stockings are concentrated within 30-60 days, and those with small stockings are within 15 days. It is estimated that The comprehensive market inventory is around 25 days. However, in addition to the stocking of polyester yarn by downstream weaving, texturing, and traders, I heard that there are also speculative bargain-hunting purchases by some hardware bosses, construction bosses, asphalt bosses, and plastic bosses.
Inventory is transferred to the terminal, and the load of texturing and weaving is reduced during the holiday
However, on the other hand, affected by the sharp drop in external demand, the start of the weaving process has dropped significantly. Last week, terminal operating rates in Jiangsu and Zhejiang were lowered. As of last Friday, the overall load of Jiangsu and Zhejiang elastic machines was at 66%, and the load of looms was at 41%. Affected by the cancellation of foreign orders placed in March and the general lack of domestic sales, the overall inventory of gray fabrics in Jiangsu and Zhejiang loom factories is high. Downstream factories will arrange short stops during the Tomb Sweeping Day holiday to slow down the increase in inventory. As of Friday, in terms of weaving, Haining warp knitting has dropped to around 20% due to the impact of circuit maintenance, Changshu warp knitting has dropped to 40-50%, Xiaoshao circular knitting has dropped to around 30%, and Changxing water jet has dropped to around 50%. , Wujiang water spray dropped to around 60-70%; in terms of texturing, Changxing dropped to around 50%, Cixi dropped to 60-70%, and Taicang, Xiaoshao, and Changshu dropped to 70-80%.
Can the production reduction agreement be reached as expected?
Under the pressure of sharp decline in global demand and overflowing inventories as the epidemic worsens, oil-producing countries themselves have extremely strong demands for volume control and price promotion, and the convening of an emergency meeting is inevitable It must be done, but it still faces two key problems. First, OPEC, led by Saudi Arabia, will not be solely responsible for reducing production. Even if non-OPEC oil-producing countries led by Russia agree to join the negotiations, the battle for shares will be a long discussion process. Second, there is still a question mark whether oil-producing countries will work together to reduce production capacity to turn the tide. The sharp decline in global demand and the accelerated depletion of inventory space mean that supply cuts will have a limited effect on restoring balance to the oil market. The market is generally expected to shrink global oil demand. Production cuts of more than 20 million barrels per day or 10 million barrels per day cannot cover the reduction in demand. At present, oil prices are highly uncertain and volatile before an agreement is reached at the OPEC enlargement meeting. It is recommended to wait and see for the time being.
Based on the loss of foreign trade orders and the scarcity of domestic trade orders, the operating pressure of polyester companies has increased sharply. This large-scale stocking operation has further increased the pressure on production and operation. Conflicts such as excessive costs and corporate financial constraints may become apparent. If you hoard a large amount of goods, in the short to medium term, you may face the risk of “price but no market”. Therefore, it is recommended that you do not blindly stock up on stocks in the short term to buy stocks at low prices. It is understandable that you just need to stock up. Even if this “bottom” is a “bottom”, the bottoming time is a long and repeated process, so there is no need to rush. </p
