Last Saturday, the 179th OPEC Conference was held via video conference.
According to Xinhua News Agency, the Organization of the Petroleum Exporting Countries (OPEC) issued a statement on the 6th saying that OPEC and non-OPEC oil-producing countries agreed to reduce the current average daily production of 9.7 million barrels. The scale of crude oil production cuts has been extended to the end of July.
The statement issued by the meeting said that OPEC and Africa OPEC oil-producing countries agreed to extend crude oil production cuts of an average of 9.7 million barrels per day until the end of July; at the same time, countries that failed to complete 100% of their production reduction quotas in May and June will make up for it with additional production cuts from July to September. According to the oil production reduction agreement reached by OPEC and non-OPEC oil-producing countries on April 12, the scale of production reduction from May to June this year was an average of 9.7 million barrels per day, and the scale of production reduction from July to the end of the year was reduced to 7.7 million barrels per day.
The historic agreement to reduce oil production is a major positive stimulus for crude oil prices. On the 8th, WTI crude oil opened at US$39.414. It opened lower and moved higher during the session, and the price once exceeded US$40.
The price of crude oil has risen, driving the polyester raw material market to also rise.
In terms of PTA, Zhengzhou Commercial Exchange PTA futures closed at 3,772 yuan/ton, an increase of 72 yuan or 1.95% compared with the previous trading day.
In terms of ethylene glycol, DCE B Diol futures closed at 3,772 yuan/ton, an increase of 16 yuan or 0.43% compared with the previous trading day.
Generally speaking, the rise in crude oil prices is The price of polyester raw materials has a stimulating effect, and the increase in the price of polyester raw materials can drive up the price of polyester yarn and the explosion of production and sales. On the 8th, the price focus of various polyester filament products was raised again, and manufacturers’ quotations all had room for an increase of 50-155 yuan/ton.
In terms of production and sales, Jiangsu and Zhejiang regions on the 8th The average production and sales of major mainstream polyester filament manufacturers is 120%-140%, and some better factories can reach 200%.
The OPEC production reduction agreement has been the focus of everyone’s attention recently. Now that the production reduction agreement has been confirmed to be extended, crude oil prices have risen again, which in turn has stimulated weaving manufacturers to stock up on raw materials. But how long can this outbreak of production and sales last?
The cost side rebounded and prices were supported
For now For the polyester yarn market, fluctuations in cost may have the greatest impact.
PTA and ethylene glycol are the most important raw materials for polyester filament, and their prices have a significant role in promoting the price of polyester filament. However, the current prices of PTA and ethylene glycol have increased compared with the previous period. In the past month, the prices of PTA and ethylene glycol have increased by 8.10% and 2.70% respectively.
Since the beginning of this year, the demand for downstream polyester has been average, and the inventory is temporarily difficult to consume. High inventories of PTA and ethylene glycol have become One of the biggest factors dragging down its price. However, thanks to the recent rise in crude oil prices, the spot prices of PTA and ethylene glycol futures have rebounded strongly, giving polyester yarn prices a reason to increase.
Although the upstream cost side has strong support, the downstream demand side is weak. Polyester filament is currently in a situation where it is hot at the top and cold at the bottom.
The operating rate has declined, and weaving companies have entered a inventory accumulation cycle
Last year, we often said that the market situation was “not strong in the peak season and even weaker in the off-season”, but it seems more appropriate to use it this year. Since the outbreak of the epidemic in China, the order situation of weaving companies has not been ideal. Due to the lack of production capacity in the market just after the market reopened, most weaving companies have not fully increased their load, and there is still a wave of regular products on the market. However, due to insufficient order follow-up in the later period, production and sales were difficult to balance, and companies began to accumulate inventory. The “Gold, Three Silver, Four Reds in May” market did not come as expected.
Judging from recent surveys, lack of orders is still a common problem in the textile industry. As the traditional off-season atmosphere deepens, weaving manufacturers are still short of orders and have cash piled up in their warehouses. According to the sample companies tested by China Silk City Network,Currently, the inventory of gray fabrics in Jiangsu and Zhejiang has risen to about 42-43 days, which is an increase of about 2 days compared with the same period last year.
grey fabric inventory continues to increase, and manufacturers are motivated to produce It has also been suppressed. After all, in this year’s market situation, having cash in hand is king, and piling it in a warehouse will only depreciate. As of June 5, the operating rate of looms in Jiangsu and Zhejiang has further declined to about 72%, which is also lower than the same period last year.
It is difficult to remove warehouses in weaving companies, and the startup rate With the decline continuing, it is unknown how much funds will be available to purchase raw materials.
The bankruptcy of clothing companies is still continuing, and demand is unlikely to improve for a while
The epidemic has taught us too much. Affected by the epidemic, the global economy has been shut down, and the global apparel industry has entered a cold winter: sports brand giant Adidas’ first-quarter net income fell 96% year-on-year, Uniqlo expects its net profit in fiscal 2020 to fall 40% year-on-year, and GAP sales fell by nearly half. Being sued by Simon Mall for rent arrears…
It’s much more than that! In the past two days, I.T Group, the “originator of trendy brands”, has been subject to frequent hot searches. It can no longer hold on any longer. It suffered a huge loss of HK$700 million in 2019. For this reason, I.T closed 26 branches in Hong Kong and Macao, and asked employees to take unpaid leave and reduce wages. The company’s stock price has plummeted by nearly 80%.
At the same time, there is news that as many customers in Cambodia canceled orders for ready-made clothing, footwear and travel supplies in the first quarter, sales of these products will decline year-on-year. 50%-60%, causing 250 garment production activities in Cambodia to be suspended and more than 130,000 workers to lose their jobs.
Various phenomena indicate that terminal demand has shrunk severely due to the impact of the epidemic, and the cold winter of the clothing industry has been lengthened. It will not take a while for demand to improve. Especially in foreign trade, it is more difficult for demand to improve. Taking the United States as an example, as of 9:00 on June 8, Beijing time, there were more than 1.93 million confirmed cases in the United States, making it the country with the largest cumulative number of confirmed cases and deaths in the world. According to US media reports on the 6th, for more than ten days, continuous protests across the United States have intensified the spread of the new coronavirus pneumonia epidemic, and the number of confirmed cases has rebounded in many states.
It is difficult for demand to improve, and weaving companies are naturally facing a shortage of orders. When it comes to polyester yarn, it is difficult to support the sustained production and sales explosion and price increase. rise.
Editor’s Note
The crude oil production reduction agreement reached an agreement The rise in crude oil prices is a positive boost, but while the global epidemic is still spreading, the world’s demand for crude oil has plummeted, and it will be difficult for crude oil prices to return to the high of $50 in a short period of time.
For the polyester industry chain, the rise in crude oil may bring about a short-term market. At that time, in the form of sluggish terminal demand, the market wanted to Lasting is still difficult.
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