“Editor, do you think the price of polyester filament will continue to rise?”
“We can’t stop for the time being. It should still go up to three or four hundred.”
“Can it rise so much? The downstream companies can hardly keep up!”
——2016.12.9
“Editor, your prediction is wrong, it seems that it can’t rise recently!”
“But, looking at it like this, it won’t fall.”
“How much more can it increase? Can we save it for next year?”
“It’s not impossible. Anyway, there are only about ten days left before next year, and it happens that the downstream has reached the replenishment node…”
——2016.12.22
This year, the textile industry has experienced an “extraordinary” year. From September to now, polyester raw materials, led by polyester filament, have violently increased under the strong support of costs, and some raw materials such as polyester and nylon raw materials have even increased. An increase of more than 30%. In any case, the market trend this year is a foregone conclusion. Now, everyone is more concerned about the market trends next year. However, various signs (see below for details) indicate that with the improvement of industry prosperity, the price of chemical fiber products may reach a higher level next year.
1. From the perspective of supply and demand pattern of the industrial chain
Industry investors predict that the supply and demand pattern of the polyester filament industry is undergoing profound changes. The supply and demand inflection point of the polyester industry appeared in 2015. Since the inflection point of the price cycle often lags behind the inflection point of supply and demand balance, the trend of polyester filament boom and price reversal is very certain in 2016, especially since the second half of the year. Since 2011, the pattern of “PX has made a lot of money, PTA and polyester have been bleak” in the industry chain will most likely change, and the profits of the industry chain are most likely to shift to the polyester/polyester filament end. ”
Today, the growth rate of polyester filament production capacity has shown a downward trend for three consecutive years. Only large factories such as Tongkun, Xinfengming, and Shenghong are still continuing to expand production. Production capacity expansion tends to be orderly, and concentration is slowly increasing. In 2017, with the improvement of the downstream and the increase of the price of upstream raw materials, the industry prosperity index will further rebound in the future.
2. From the perspective of the trends of leading companies in the industry
As the leader in the polyester filament industry, Tongkun Co., Ltd. has a greater say in the market. In the company’s recent announcement, it can also be seen that it is full of confidence in its main business – “At the end of November, OPEC reached its first production reduction agreement since 2008, the oil price center will move upward, and the profits of the entire polyester industry chain will expand. All aspects will benefit.
Since October, the price of polyester filament has risen steadily, reaching a new high for the whole year, and factory profits have improved. “The company stated that it will continue to increase its main filament business and plans to raise no more than 1 billion yuan for the “annual output of 300,000 tons of functional fiber project”, the “annual output of 200,000 tons of porous flat comfortable fiber technical transformation project” and “Introducing a fully automatic intelligent packaging assembly line construction project.”
3. From the perspective of enterprise replenishment cycle
Classic cycle theories generally include the 40-60-year Kondratieff cycle, the 15-25-year Kuznets cycle, the 8-10-year Jugla cycle, and the 3-5-year Kitchin cycle (i.e. inventory cycle).
Since 2000, the inventory cycle has gone through a total of five rounds, and began to enter the sixth round of inventory increase in August 2016. Generally speaking, the inventory increase stage is accompanied by price increases, and the inventory destocking stage is accompanied by price declines. At the same time, price increases or decreases generally precede turning points in the inventory cycle.
Commodities began to rebound in early 2016, and corporate marginal profits improved. However, due to the inertia of bear market thinking and the lag effect of production inventory, companies are still in a declining stage of inventory. At this time, they are in what we call the passive destocking stage. After a reflection period of more than half a year, the company entered the active inventory replenishment stage from August 2016. Later, it needs to wait for intensive confirmation of demand.
According to statistical inference, this inventory replenishment phase is expected to last until around the middle of 2018 (the inventory replenishment lasts at least 12 months, that is, at least until the third quarter of 2017). Specifically, whether it is a strong cycle replenishment behavior or a weak cycle replenishment behavior needs to be verified by demand. According to the rule that the price peak time is ahead of the end of inventory replenishment, it is expected that the peak time of this bulk rising phase will be in the third quarter of 2017.
4. Judging from seasonal trends over the years
Since October, polyester sales have accelerated, especially when inventories fell to historical lows in December. As of December 15, the inventory of POY and FDY was mainly 0-5 days, and some factories had negative inventory; the inventory of polyester staple fiber was 7-2 days, and some were out of stock for half a month; the inventory of polyester chips was -5-2 days. The generally low inventory or even shortage of goods in downstream polyester plants means that polyester operating rates will remain high until downstream demand weakens and polyester plants accumulate some inventory before companies will consider reducing production and suspending production.
There are two main peak seasons for polyester in a year, namely March in the first half of the year.-May and September-November in the second half of the year. It is foreseeable that the current low polyester inventory will inevitably lead to intensive replenishment before and after the Spring Festival. At the same time, high profits will also increase the willingness of polyester factories to start operations. It is expected that in the first half of next year, except for the centralized parking during the Spring Festival, polyester factories will still maintain a high level. load. If terminal demand improves significantly in the second half of the year, or overall inventory replenishment continues, overall polyester production will remain relatively high.
5. From the perspective of raw material price trends
Recently, crude oil prices have been oscillating above US$50/barrel, and naphtha and PX prices have also been oscillating at high levels. In particular, CFR China PX has reached US$860/ton, a new high for the year.
Although the negative effects of the crude oil production reduction agreement have been digested, the market outlook will focus on the implementation of the production reduction agreement. Crude oil prices may continue to fluctuate with relevant news, but the tight supply of PX will remain in the first half of 2017, and the depreciation of the RMB will also make the US dollar Pricing of raw materials such as naphtha and PX increased. From this point of view, the possible increase in market costs will have a positive impact on PTA.
Editor’s note: To sum up, the polyester segment’s prosperity began to gradually improve in the second half of 2016. This phenomenon will last at least until the first half of next year. Whether the prosperity in the second half of the year can be sustained depends on the downstream industry. recovery of demand.
However, the editor believes that the worst has passed, and all that needs to be done is to wait patiently for the dawn to arrive. Exports in the terminal textile and apparel sector are weak, profit growth is still not optimistic, and short-term prosperity is still low. However, what needs to be seen is that the textile industry has shown signs of restocking, and needs to be continuously strengthened and confirmed in the later period.
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