This week, international oil prices began to fall off a cliff again.
As of 20:00 on December 19, the main contract price of NYMEX crude oil futures in the United States hovered around US$46.42/barrel. In the past three trading days, it has increased from 51.25 US dollars per barrel. The U.S. dollar fell all the way to $45.79, a cumulative decline of more than 13%. If the price of the main NYMEX crude oil futures contract in early October hit its highest point of $76.90 in the past four years, the oil price has fallen by nearly 40% in the past 80 days.
The decline in international oil prices has led to the decline of the entire polyester industry chain. It casts a shadow on the already extremely difficult road to destocking polyester filament yarns at the end of the year.
Polyester has a long way to go before destocking
The time is approaching the end of the year, and the number of orders on the market is getting smaller and smaller. For weaving companies, the next thing to do is basically to finish the remaining orders on hand, collect the receivables, and finally stock up on raw materials for the New Year.
Judging from previous visits, because the market is not very good this year and the Chinese New Year is relatively early, a large number of weaving companies generally have holidays All between January 15th and January 20th, which is less than a month away. According to the practice in previous years, most weaving companies will purchase raw materials once in the next month, and the quantity will not be small. For polyester companies, this is also the last opportunity to clear inventory during the year.
Polyester companies are now having a hard time. In other words, starting from September this year, polyester companies have not been having a good time. The most important task for polyester companies now is to destock, and the focus is to seize the wave of weaving companies hoarding raw materials.
In order to achieve this goal, the polyester factory has indeed made many efforts. Less effort:
1. This year’s polyester plant shutdown and maintenance plan has been advanced. This is easy to understand. After all, comparing the production and sales of polyester in the past two months, the current production capacity of polyester filament is absolutely surplus. It’s almost holiday time. If we don’t shut down some production capacity, how can we get rid of inventory?
2. In the past two weeks, the price of polyester has shown a stable and rising situation. Taking the common polyester filament FDY150D/96F specifications as an example, we can see that after December, while the prices of PTA and ethylene glycol continued to fluctuate, the price of polyester filament showed a steady and slight increase. This phenomenon will not stimulate the sensitive nerves of the downstream weaving market, but also make the weaving factories feel that “buy early and feel at ease early, buy late and the price will increase.” It has to be said that it is a clever method to increase the market’s buying momentum. .
These measures have indeed had a certain effect. From the polyester stock dynamics We can see from the picture that after entering December, the inventory of polyester filament has indeed been declining.
If we continue to follow this trend, polyester manufacturers can gradually Inventory, downstream weaving factories can also stock up with peace of mind, but things are far from that simple.
The game between polyester factories and weaving companies
As crude oil prices began to fall this week, PX, PTA, and ethylene glycol in the polyester industry chain also began to decline. The price has dropped, but how long can it last?
Assume that a water-jet loom uses 30kg of raw materials a day. If it is a factory with 100 water-jet looms, it will cost The consumption of raw materials is close to 90 tons. Based on the calculation based on stockpiling raw materials for one month before the Chinese New Year, if the price of polyester yarn drops by 500 yuan/ton, the difference between these raw materials before the price drop and after the price drop will be 45,000 yuan.
The same is true for polyester factories. If the same batch of 90 tons of raw materials is sold before and after the price drop, the gross profit of the polyester factory will be The profit difference is 45,000 yuan.
Weaving manufacturers want to wait until the price of raw materials drops to sell, and polyester factories want to sell them in While destocking, try to sell raw materials at a high price.
Weaving manufacturers will definitely buy silk when they need to stock up at the end of the year, but when and how much they will buy is uncertain; in order to collect funds, polyester factories protect their silk fabrics. Polyester filament has pricing power, so be sure to stock it.
So the final question becomes when will weaving companies buy silk? How much silk will you buy? When will polyester filament prices drop?
When will weaving companies buy silk?
In early December, due to the positive factors of the easing of Sino-US trade frictions reached at the G20 summit meeting between the heads of state of China and the United States, polyester production and sales increased on December 3 It hit a high of 400% on the same day. Although production and sales fell slightly in the following days, they basically remained above 100%. During this period, most weaving companies with urgent needs to purchase raw materials have purchased sufficient raw materials, and some companies have even completed their end-of-year stockpiling work.
Therefore, most weaving companies now have no shortage of silk. When they know that the price is likely to drop in the future, they will of course wait and see for a while, even if some At this stage, companies need to buy silk for production, and they basically buy and use it as they go, so there is no possibility of stockpiling now. Basically, you have to wait and see until the price has almost bottomed out before stocking up.
How much silk will weaving companies buy?
How much raw materials weaving companies will stock up is related to the current weaving market and the forecast of future weaving market. On the evening of December 19, the Federal Reserve made the decision to raise interest rates for the fourth time this year. Naturally, the biggest impact will be on the exchange rate of the US dollar. In the early stage, affected by the easing of Sino-US trade, there was news that large enterprises such as Ningbo Polyester Factory and Su Meisheng had received foreign orders worth hundreds of millions. For these large companies, small fluctuations in exchange rates can have a very large impact on their profits.
On the other hand, during the visit, the author found that for small and medium-sized textile companies, the easing of Sino-US trade has basically no impact on their end-of-year market conditions. Even in order to clear inventory, there is still some selling of goods in the market. It can be seen that cloth bosses are not very optimistic about the market next year, so they are not expected to stock up too much when stocking up at the end of the year.
When will the price of polyester filament drop?
In addition to affecting the exchange rate, the Fed’s interest rate hikes will also have a certain impact on the prices of commodities such as gold and crude oil. The three interest rate hikes before this year In March, June and September respectively. Judging from the trend of international oil prices, after several previous interest rate hikes, the trend of international oil prices has a slight downward trend, but this change generally only lasts for 1-2 days.
However, the current international oil prices are already on a downward path, and any further interest rate hikes by the Federal Reserve at this time will only further suppress oil prices. When oil prices fall, the prices of PTA and ethylene glycol may also fall.
In addition, the recent buying sentiment of downstream weaving for polyester is also very weak. This week, the production and sales of polyester have become very poor. On Wednesday (December 19), it was only 30-50%. Therefore, the author predicts that if crude oil continues its decline and polyester production and sales continue to be so poor, the price of polyester filament will soon fall.
The rule of “buy up, not buy down” has failed ?
We can find an interesting phenomenon from the recent production and sales: although the price of polyester filament has not fallen, and weaving manufacturers also have a need to stock up, the production and sales of polyester But it is getting worse day by day. Has the rule of “buying up, not buying down” expired?
This is not the case. “Buy up, not buy down” is based on the fact that when the price of the product keeps rising, the buyer is bullish on the future price of the product. can only be achieved under certain conditions. However, the current situation in the polyester market, both upstream and downstream, is unfavorable to the sales of polyester filament. The price of polyester filament is expected to be lower in the future, and the funds involved in stocking of weaving manufacturers are very large, and they are very sensitive to the price of raw materials. Therefore, This has led to the current situation.
With the sharp drop in oil prices, the textile market at the end of the year has changed from polyester filament to Stable and steady growth, weaving companies stocked up in an orderly manner, and polyester companies wanted to clear their inventories. All of a sudden, polyester factories were unwilling to drop prices, weaving companies were unwilling to buy silk, and polyester production and sales fell again. If you want to break the situation, one party always needs to make concessions. Judging from the current situation, polyester companies are more likely to make concessions. </p
