-01-Profits of textile companies have improved compared with last year
China’s strong economic data and signs of improving demand in the United States have provided support to energy prices. However, high inflation data triggered expectations that global central banks will continue to actively tighten monetary policies, which suppressed the rise in energy prices. Crude oil futures closed slightly higher and continued to maintain at two-week highs.
West Texas Intermediate crude oil futures for April delivery on the New York Mercantile Exchange rose 47 cents to settle at $78.16 a barrel, a gain of 0.6%, the highest since February 16, according to Dow Jones Market Data. Global benchmark Brent crude rose 44 cents, or 0.5%, to $84.75 a barrel, its highest settlement in two weeks.
“Starting from the end of last year, spinning profits improved month-on-month, but this phenomenon only lasted for one month. In mid-January this year, with the rise in cotton prices, the theoretical processing profits of textile companies declined, falling back to 400 yuan/ton in early February. After that. , cotton prices have fallen faster than cotton yarn, and the theoretical processing profits of textile companies have rebounded again, currently at 700 yuan/ton.” said Wang Xiaobei, senior cotton analyst at Hongye Futures.
Zhang Xiaojin, director of resource product research at Everbright Futures, also believes that the current profits of the textile industry are acceptable. As of March 1, the quotation for 32-count pure cotton carded yarn was 23,450 yuan/ton. Calculated based on the loss of 1:1.1, the processing profit was 1,530 yuan/ton, which is higher than the historical average since 2020.
According to market research results, the textile market is showing signs of recovery. Recently, textile companies in Jiangsu and Zhejiang have been replenishing raw materials, and the operating rate is at 70% to 80%. Most of the production orders were signed years ago, and the orders are scheduled for more than a month, but the number of long-term and large orders is small. The market has greater expectations for this year’s “Gold, Three, Silver and Four”, but the stocking is relatively cautious at present, and it is still waiting to see the recovery of subsequent orders and consumption.
Polyester load index Recently, the demand side and terminal polyester production have recovered well, which has strong support for the raw material side. However, the polyester load has increased significantly to 86.1% last week, and the terminal texturing and loom startup rates have returned to seasonal high levels, 92.5% and 75% respectively. The market has high expectations for the recovery of demand, and the demand side is expected to recover further in the next small peak season of “Gold, Three, Silver and Four”.
The stocks of filament yarn and short fiber have been at high levels recently. Major filament yarn manufacturers have recently carried out fancy promotions to reduce inventory. Staple fiber is mainly based on rigid demand orders. Although the operating rate of terminals is high, the number of new orders is insufficient. As of March 3, the number of textile order days was 12.56 days, which increased significantly on a week-on-week basis but is still overall weak. Among them, foreign trade orders are significantly weaker than in previous years, and domestic trade orders are acceptable.
Prices rose on Monday. The production and sales of mainstream polyester filament manufacturers were mostly between 100% and 200%, and some higher production and sales were between 300% and 400%. Taking into account the current different capital and inventory pressures of enterprises, polyester filament factories generally rose by 100-200 yuan/ton in the past two days, but the increase was unsustainable. The average production and sales rate of sample factories was 183.8%.
To sum up, polyester filament yarn will be driven by cost-end support in March. In the short term, polyester yarn prices will remain strong. If the demand side helps, driven by high costs and strong demand, polyester yarn prices are expected to remain strong. It may enter a new chapter of price increases, which will be unstoppable!
Trend chart of weekly average production and sales data of polyester filament from 2022 to 2023. The textile downstream operating rate has reached a high level for the same period in previous years. “Last week we conducted on-site surveys in Hengshui, Hebei and Juye, Shandong. According to the main local cotton warehouses, the arrival of Xinjiang cotton has increased recently. , but the tension in railway transportation has eased, and textile companies are picking up goods directly from the platform. The more than 10,000 tons of lint cotton recently put into the two warehouses are now basically all shipped out, and the shipping speed is much faster than a year ago. Almost all local textile companies have started work. The profit is also good. Although the yarn sales are average, it is much better than last winter.” Ma Hongqin, deputy general manager of Shunfeng Cotton Network, said.
Wang Xiaobei told a reporter from Futures Daily that after the Lantern Festival, the operating rates of yarn mills and cloth mills rebounded rapidly. In terms of downstream consumption, domestic sales were better than exports, and orders were mostly small and short orders. The traditional peak consumption season is coming, and the market has good expectations for this.
This year’s market is complex, and the international situation is still unstable. In terms of domestic sales, after three years of epidemic, most people’s incomes have been affected, demand has declined, and it will take time to recover consumption power. Confidence in the second half of the year is greater than that of the first half. In terms of foreign trade, affected by the hegemony of the United States, economic de-Sinicization and hard decoupling of trade have caused a serious decline in foreign demand. Therefore, there is no need to be too optimistic about the improvement of this situation. Relatively speaking, we should try our best to go to markets such as Europe and Southeast Asia to do more. New development is more secure.
In addition, partial transfer of the production chain is also a general trend. The spillover from downstream textile factories. On the one hand, the costs in the central and western regions and Southeast Asia are lower, mainly including land, electricity, and labor force, which will definitely be smoothed out over time. In addition, countries such as Vietnam and Bangladesh have the advantage of zero tariffs and no quotas with developed countries such as the European Union and the United States, which is conducive to exports.
Comprehensive overview�: Demand has not substantially improved. Downstream and terminal players have returned to a wait-and-see mentality after covering up their positions. The high production and sales of polyester filament factories cannot be sustained. Polyester filament is expected to show a sideways trend today. Pay attention to changes in raw materials and factory production and sales data.