The Fed’s interest rate hike boots are finally here!
At 2:00 a.m. on March 16, Beijing time, the U.S. Federal Reserve announced that it would raise the target range of the federal funds rate by 25 basis points to a level of 0.75% to 1.00%, in line with market consensus. This is the third interest rate increase since the end of 2015.
After the Federal Reserve’s policy statement, U.S. crude oil opened sharply higher by nearly 1.7 percentage points. The price of West Texas Intermediate crude oil (WTI) futures for April delivery on the New York Mercantile Exchange overnight rose by $1.14, or 2.4%, to close at 48.86 per barrel. For the U.S. dollar, oil prices had fallen for seven consecutive trading days.
In the short term, instead of suppressing the commodity market, the Fed’s interest rate hike has been beneficial to it!
Polyester trading sentiment is picking up, is the market all bad news?
As crude oil prices stopped falling and rebounded, the decline in raw materials also gradually stopped. Under the premise of stable market conditions, downstream textile companies have covered their positions. It is reported that as of 4 p.m. on March 16, the transaction atmosphere in the polyester filament market in Jiangsu and Zhejiang was hot, with POY still the main market, and the production and sales of mainstream manufacturers exceeded 200%.
Industry insiders have speculated that the Fed’s interest rate hike will be implemented and the previous worries will dissipate. Coupled with the unexpected decrease in EIA crude oil inventories, the market will be exhausted. Raw materials may recover in the short term!
However, we should also note that the Federal Reserve has maintained its view that it will raise interest rates three times in 2017 and three more times next year, and its long-term interest rate expectations have also increased slightly. Therefore, commodities will still face downward pressure in the long run: Crude oil and black may continue to fluctuate and build a bottom!
Inventory pressure is still there, where will the polyester market go in the future?
As we all know, international oil prices are the leader of commodities and have an important impact on the entire market. Historically, after crude oil prices fell sharply, the prices of naphtha, PX, PTA and other products followed suit, and the prices of downstream polyester products were also indirectly lowered.
Chemical fiber companies that have lost the support of oil prices are called “the bones are chopped off and the tendons are connected” by the game. In other words, the greater the uncertainty of crude oil price trends, the greater the impact on the polyester and textile industries! In 2015, affected by falling oil prices and sluggish downstream demand, the average operating rate of the domestic PTA industry was only 67.17%, and the average product price fell by 28% year-on-year. The average price of polyester products including bottle flakes, chips, staple fibers, etc. also fell by more than 22%.
Last Wednesday, international crude oil futures prices plummeted by more than 5%, commodities fell collectively, and the PTA futures market also fell sharply. Since then, the polyester raw material PTA market has entered a downward channel.
In addition, the overall destocking pressure of the polyester industry chain is still heavy recently. In addition, during the traditional peak season in March, the downstream weaving market of the polyester industry chain is far worse than expected. Under the continued influence of many negative factors, the future trend of the polyester market is still there. Great uncertainty.
Fortunately, the polyester market has fallen this time, and the cost side has declined rapidly. In addition, the polyester market has good profitability in the early stage. Therefore, the overall polyester market is still profitable at present. However, if the polyester market continues to decline, some polyester products will suffer losses. risks of.
Generally speaking, polyester products are now once again in a deadlock of “go left or go right”. If crude oil continues to be unstable, the chemical fiber industry may still be hard to be optimistic about the market outlook!
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