Ross crude oil exports are restricted, and the possible delay in the return of Iranian crude oil to the global market has exacerbated concerns about tight supply. WTI crude oil futures rose to the highest level since 2008, and Brent crude oil futures were close to US$140 per barrel during the session.
The craziness of oil prices has intensified, causing a huge shock to the entire textile industry. Polyester commodities such as PX, PTA, and ethylene glycol all followed the rise sharply, but downstream companies were unable to follow the rise, resulting in profit losses. The situation is turbulent, the textile market is extremely unstable, and the industry is facing huge challenges.
On the 7th, polyester filament prices experienced general gains, but production and sales were only at 85%, failing to exceed 100%. Downstream weaving companies still wait and see more and lack enthusiasm. On the 8th, the price of polyester filament was stable and failed to continue its upward trend driven by crude oil. From many aspects, it is still difficult for polyester filament to truly open the upward channel.
Crude oil has the risk of rising and falling
From the cost side, the current crude oil and PTA can indeed strongly support the price of polyester filament. However, the global situation is unstable and the future is uncertain, and there is a high possibility that crude oil will rise and fall back.
Recap history
From a historical perspective, crude oil has only reached $100/barrel three times in history. For the first time, the US subprime mortgage crisis began to spread in March 2008. Oil prices rose above US$100 on March 5 and hit a historical high of US$147 on July 11. Subsequently, as the global financial crisis continued to unfold and the economy and demand weakened significantly, oil prices fell below US$100 in September and hit a low of US$36 in December.
The second time, the global financial crisis and the European debt crisis broke out in January 2011; in terms of geopolitics, the situation in the Middle East was tense and social unrest occurred in important oil-producing countries. Oil prices topped $100 on January 31 and hit a high of $128 in March 2012. Finally, in the second half of 2014, under the multiple influences of the Federal Reserve’s monetary tightening and the “disruption” of shale oil, the supply and demand pattern reversed and oil prices entered a rapid decline channel.
Taking history as a guide, after the first two crude oil prices hit $100, they both ended up falling back. Moreover, shrinking demand has a more direct impact on lower oil prices, while supply expansion breaks down more slowly. History is worthy of our reference, and it is very necessary to guard against a sharp drop in oil prices.
Low demand and high inventory make it difficult to balance polyester production and sales
From the perspective of polyester filament itself, there are currently “three highs and one low” disadvantages: high production, high inventory, high costs, and low demand! The overall demand side of the market performs poorly, and the production and sales data of polyester filament factories are mostly at a light level. Only at certain times, the production and sales data perform better, but this cannot cover up the situation that the production and sales of enterprises have not flattened in the first two months of this year. At this time, the inventory level of polyester filament factory is already comparable to that of the same period in 2020.
Polyester supply will hit new highs
At the same time, the output of polyester filament in February was 2.261 million tons, a month-on-month decrease of 9.72%, and a year-on-year increase of 19.2%. It is expected that the output growth will continue to increase in March and may reach 21%. According to data from Silkdu.com, the average operating load of domestic polyester filament yarns is about 86.10%, an increase of 1.10% from last week. Most of the parking devices have been restarted before the Spring Festival, and devices such as Ningbo Quandi and Jinsheng are still increasing their load. In addition, the new production capacity of Xinfengming Dushan Energy is also gradually producing yarn. Overall, the supply of polyester filament in March It will be a record high.
At the same time, we should also clearly see that the current downstream situation is not very optimistic. First of all, the filament inventory of polyester factories is still maintained at a relatively high level. It will take about 21-25 days for the recovery of the downstream weaving industry. In general, the current operating rate is mostly maintained at around 70%. In this case, polyester factories seem to have insufficient confidence in raising filament prices.
The number of downstream orders received is less than expected
At present, the oversupply situation in the market is still prominent, and the high inventory situation of conventional fabrics is also serious. Compared with the inventory of raw materials, the destocking pressure of gray fabrics is greater. Judging from the past two days, although we have entered the traditional peak season, the current sales situation of weaving companies is still difficult to open up, with few products for sale, especially conventional fabrics such as polyester taffeta and pongee, which occupy a large market share. Sales were not as expected. As a result, the inventories of weaving enterprises have continued to rise, and in fact, raw material inventories have been transferred to weaving enterprises to some extent. This inventory pressure in the terminal market is probably more dangerous than inventory in polyester factories.
Under the current situation of high supply, weak demand and high inventory, polyester filament will rely more on cost-end support in March. However, polyester filament yarn is currently following the increase in raw materials, and the focus of transactions has moved upward. However, it is far less than the increase in raw materials, so cash flow has been significantly compressed. Currently, Russia and UkraineThe situation is changeable. In the short term, oil prices are easy to rise but difficult to fall. With the support of the cost side, polyester filament yarns are also expected to rise, but the upward path may be bumpy.
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