At the beginning of the week, crude oil fell sharply, with WTI crude oil falling nearly 4.0% during the day, and Brent crude oil falling nearly 4%. At the same time, the global market suffered a bloody disaster, with U.S. stocks falling for two days in a row, the largest decline in about two months, and hitting all-time lows. Affected by this, the bulk commodity market is even more “wailing”…
Just when everyone was still immersed in the haze of Black Monday and silently “licking their wounds”, the polyester market resolutely staged a dramatic and strong rebound!
On the 23rd, after being sluggish for many days, the production and sales of polyester factories generally exceeded 200%, and some were as high as 900%. Some downstream manufacturers that have less stock in stock and are waiting to wait and see in the near future have jumped out to purchase, and the enthusiasm for market transactions continues to heat up. Thanks to this, market inventories have dropped significantly. It can be said that the entire polyester market has finally begun to become restless after waiting for a long time.
So how long can the good times that emerged at the end of August last?
Polyester filament dilemma: power cuts, costs, inventory
Since the polyester market has been tepid since August, this round of purchases has affected the nerves of most market participants.
In August, due to the impact of power rationing policies in Zhejiang and Jiangsu, the start-up rate of the polyester industry, especially in the downstream areas, dropped sharply. The shrinking market demand caused polyester filament inventories to continue to grow, and the problem of mismatch between supply and demand became prominent. However, as oil prices and raw materials rebounded, To boost the confidence of manufacturers, the polyester filament market trend was divergent at the end of the month, with rising and falling expectations mixed.
Summer high temperatures swept across the eastern coastal areas, with many places in Zhejiang experiencing temperatures of 40°C. The falling water level of the Yangtze River resulted in insufficient supply of hydropower generation. In order to ensure people’s livelihood, many areas in Zhejiang have implemented strict power rationing policies since early August. Affected by this, the downstream texturing, printing and dyeing industries, as links with high energy consumption in the polyester industry chain, were the first to be included in the power restriction list. As the downstream operation rate gradually declines, polyester filament yarn has also experienced a tepid market. On the one hand, cost pressure has not diminished, polyester filament yarn profits have remained at a low level, and the willingness to reduce prices is not strong. On the other hand, downstream users have become more aggressive in buying prices. The low sentiment has further intensified the high pressure on polyester filament stocks, leaving polyester filament in a dilemma.
The three magic weapons of “buy, buy, buy”: relaxing power restrictions, cost support, and falling leaders
Towards the end of the month, some downstream users have a certain demand for replenishment, so they should replenish their positions appropriately at bargain prices. Partial production and sales of polyester filament have picked up, and manufacturers are gradually becoming more willing to ship. The market has gradually seen profit-making shipments, and the market downward risk has intensified. However, with the rebound in oil prices, the main raw material PTA has fluctuated and strengthened. Under the support of the cost side of polyester filament, manufacturers have shown a price support attitude, and the market transaction center has tended to be stable. From the downstream point of view, the temperature in Jiangsu and Zhejiang has dropped since this week, with Taicang and Changshu The power restriction policy has been relaxed in some areas such as , Huzhou, Xiaoshao and other areas. Dynamic adjustments are being made in other areas. It is expected that the start-up of texturing and weaving will be moderately improved. However, the long-awaited “promotion” activities of downstream users are expected to be aborted, raw material inventory is at a low level, and downstream users have a certain demand for replenishment, resulting in increased production and sales of polyester filament on the 23rd.
In addition, the weak and stable market has lasted for half a month, and the market sentiment is high. However, the current willingness of leading companies to stabilize prices, coupled with the cost-end boost and a slight increase in terminal demand, combined with many favorable effects, demand for polyester filament has picked up, giving companies A shot in the arm, the bullish atmosphere in the market gradually heated up.
In recent years, the main driving force for the multiple upward price increases of polyester filament comes from cost-end support, especially the price trend of the main raw material PTA is relatively similar. In 2022, PTA will fluctuate and rise, the cost pressure of polyester filament will be highlighted, and the focus of transactions will rise simultaneously. Since August, PTA has been running weakly, and polyester filament has also fallen into a stalemate. At the end of the month, as oil prices rebounded, PTA prices fluctuated upward, and polyester filament cash flow Continued compression, cash flow losses for most models, some polyester filament manufacturers have a strong willingness to support the market, and may follow the trend of raw materials at the end of the month. If raw materials continue to rise, polyester filament prices will be partially raised. If raw materials trend overnight, polyester filament prices may remain stable and wait and see.