This Thursday and Friday, PTA, which has been short-sold, ushered in a rare “two consecutive rises”, as of 23:30 on December 6 , PTA futures finally closed at 4834 points in the night, returning to above 4800 points.
Why did PTA rise this time? What kind of subsequent impact will this long-lost rally have on the pre-holiday textile market?
OPEC proposes production reduction plan , international oil prices rose
On December 5, OPEC will A meeting was held in Vienna, Austria, to discuss crude oil production cuts. At the close of trading on December 5, the price of WTI crude oil futures for delivery in January 2020 rose 4.15% to close at $58.43/barrel; the price of Brent crude oil futures for delivery in February 2020 rose 3.58% to close at $63 USD/barrel.
On Friday night, Beijing time, OPEC+ officially announced that it would cut an additional 500,000 barrels per day in the first quarter of next year to help avoid oversupply and support oil prices in the first quarter of 2020. After the news was announced, the two oil prices rose by more than 2%, further extending their previous gains.
Crude oil is the most raw material for polyester products. Its fluctuations can easily cause price changes of various products in the polyester industry chain. The expectations for production cuts conveyed by this round of OPEC meetings have boosted international oil prices and given the troubled PTA a shot in the arm.
Polyester production and sales are picking up, and the year-end stocking market has started
In addition to crude oil, another factor in the price increase of PTA is that downstream weaving companies have begun a stockpiling cycle, which has driven polyester factories to destock.
From the perspective of polyester production and sales, on Tuesday (December 3) and Thursday (December 5), the polyester factory’s production and sales exceeded 100% in two days. This is the first time this year. It is rare for the overall textile market to be poor in the second half of the year.
According to what we know from the weaving market, due to the combined effects of factors such as high gray fabric inventory and early Chinese New Year this year, weaving companies generally have Chinese New Year holidays earlier than in previous years. Some companies have started to take holidays since early December. .
For most weaving companies, it is necessary to stock up on some raw materials before the holidays, whether it is to prevent the price of raw materials from rising after the beginning of next year, or to make the resumption of production at the beginning of next year smoother Anyway, this is already an agreed upon thing. With the holiday coming ahead of schedule this year, weaving companies have started stockpiling raw materials before the holiday.
In such a market situation, there is enough demand from the downstream to support the short-term rise of PTA.
But at the same time, we must also see that although there are enough positives to support PTA in the near future has rebounded slightly, but in the long term, the expectation that PTA’s new device will be put into production in December is still a big negative. In addition, the recent recovery in polyester production and sales is also based on the market overdraft of the last wave of pre-holiday stockings this year. Therefore, in the long run, PTA’s future growth may be difficult to continue.
In such a market situation, how will downstream polyester factories and weaving companies respond before the holiday?
In order to reduce inventory, polyester factories may have unprecedented discounts this year
For polyester factories, the most important task before this year should be inventory control.
According to data monitoring from China Silk City Network, the current average inventory of polyester factories is around 21 days, which is close to last year’s highest inventory.
Inventory control is nothing more than starting from two aspects: production and demand.
In terms of production, the maintenance of polyester factories during the New Year this year may be very intensive. Starting last week, polyester manufacturers will gradually increase their maintenance work. Recently, some manufacturers such as Yizheng Chemical Fiber and Ningbo Quandi have polyester filament and polyester staple fiber equipment.It has entered the maintenance stage. In the later period, especially from late December to January, polyester plants have large-scale maintenance plans, such as the Spring Festival parking maintenance plans for Fujian Baihong, Fujian Jinxing, Xiamen Xianglu, Taicang Shenjiu, Taicang Changle and other polyester plants. has also been introduced.
In terms of sales, judging from the experience of the past few years, promoting polyester filament is often a good way to boost production and sales and reduce inventory. If the polyester factory’s polyester stock is still higher than the same period last year when weaving companies begin a large-scale holiday, it is not ruled out that the polyester factory will carry out a wave of vigorous promotions to remove excess inventory.
Bad memories make weaving factories struggle with whether to stock up on raw materials
Similar to polyester factories, weaving companies are also having a tough time at the end of the year. Polyester factories are struggling with how to sell silk, while weaving companies are struggling with whether they should buy silk or not. How many threads.
For this year’s weaving companies, the biggest problem should be that the inventory of gray fabrics is too high, and all funds are tied up in fabrics, so they cannot spare enough money to stock up on goods. According to data monitoring from China Silk City Network, the inventory of gray fabrics in weaving enterprises now reaches about 38 days, and near the end of the year, the inventory of gray fabrics is still increasing.
On the other hand, the price changes of polyester at the beginning of this year have given textile people unpleasant memories. At the beginning of this year, because the inventory of polyester factories was too high, the price of polyester filament fell all the way after the beginning of the year. Weaving companies lost tens of thousands to hundreds of thousands of raw materials they stocked up at the end of last year.
This year’s market is even worse than in previous years, so weaving companies will become more cautious about buying raw materials.
Editor’s Note
After the editor turned on the computer, he saw the title of an article from October last year , it talks about PTA falling below 7,000 points, but now it has risen to more than 4,800 points. The gap is embarrassing. It’s the end of the year, and the next highlight of the polyester-weaving market should be the game between polyester factories destocking and weaving companies buying or not to buy silk, and PTA can only be reduced to a supporting role when the rise is unsustainable. .
</p
