After experiencing continuous surges, international oil prices finally fell across the board on Monday!
As of the close of the day, the price of light crude oil futures for May delivery on the New York Mercantile Exchange fell by US$0.96 to close at US$79.74 per barrel, a decrease of 1.19%; the price of London Brent crude oil futures for June delivery fell by US$0.94, It closed at US$84.18 per barrel, a decrease of 1.10%.
At the same time, following the “seven consecutive rises”, polyester filament prices have briefly consolidated, and the quotations of some varieties have also shown a downward trend.
Resistance heats up and purchases become increasingly cautious
As the source of the polyester industry chain, changes in crude oil directly affect the price of naphtha, which in turn affects the prices of upstream polyester products PX, PTA, and MEG, thereby affecting the market price of polyester filament.
After the crude oil price cut this time, many polyester factories followed suit with price cuts. For example: in the early trading on April 11, the price of polyester yarn of different specifications from a mainstream polyester factory in Zhejiang was reduced by 50-200 yuan/ton; the price of polyester yarn from a polyester factory in Shaoxing was reduced by 100 yuan/ton; in the early trading on April 12, the price of polyester yarn in Jiangsu Province was reduced by 50-200 yuan/ton. The price of polyester yarn from a mainstream polyester factory has been reduced by 100 yuan/ton…
Since the rising mode of polyester filament started, production and sales have rebounded significantly and exceeded the 100% mark only on the day of “multi-national joint production reduction”. From the daily average production and sales data, we can see that downstream resistance to the continued rise in polyester prices has increased significantly, which has led to mediocre trading in the polyester market and continued sluggish production and sales.
In response to this situation, we investigated some related companies. Judging from the survey results, weaving companies are quite emotional about the continued rise in raw materials. Some companies even said that if the price continues to rise, they will “drink the northwest wind”. In order to cope with the price increase, weaving companies either shorten the raw material stocking cycle and adopt the principle of buying and using at any time; or they judge the situation and then purchase at staggered peaks to avoid high raw material prices; or they move closer to differentiated fibers and strive to develop interlaced fibers. products, reducing the proportion of polyester used.
At present, the downward trend of polyester filament prices is gradually turning from dark to clear, the market transaction focus continues to decline, the downstream sentiment remains unabated, and replenishment of inventory will become the mainstream procurement mode.
Many parties are pulling to the limit, and the startup rate is gradually declining.
After much hard work, raw materials have turned from rising to falling, but weaving companies don’t seem to be relieved.
On the one hand, the price increase of raw materials may have to be digested by the weaving companies themselves. Here, we have to mention overcapacity – a common problem in the textile industry. Data show that as of the end of 2022, the scale of looms in my country’s filament weaving industry reached 836,000 units, including 770,000 water-jet looms, a year-on-year increase of 5.48%. In 2022, my country’s total output of chemical fiber filament fabrics will reach 59.5 billion meters, a year-on-year increase of 6.82%. With such an increase, “price wars” are raging in the fabric market, which directly affects the profit margins and production enthusiasm of textile companies.
On the other hand, as the decline in textile and apparel demand in the United States and Europe has become a reality, foreign trade orders have not improved significantly after the exhibition, and the popularity of domestic sales orders has gradually cooled down. As early orders are gradually completed and delivered, it is difficult for weaving enterprises to continue their orders. To maintain production, some companies with insufficient orders have planned to produce some inventory to maintain production operations. However, if the increase in raw materials exceeds expectations, it may only be a matter of time before weaving companies choose to reduce production and take a holiday after weighing the pros and cons.
According to monitoring data from Silkdu.com, as of April 11, the operating rate of weaving enterprises in the sample was 74.2%, a decrease of 2.3% from the previous period (76.5%). It can be seen from the data that most weaving companies are currently extremely cautious in production. Compared with the lack of orders, perhaps indigestible inventory and unprofitable orders are the real “pain points” of weaving companies.
Postscript:
In general, the saying “gold, three, silver and four” has been gradually replaced by “not weak in the off-season and not prosperous in the peak season”. Looking at the entire market, the polarization among companies has become increasingly obvious. Facing the increasingly confusing market trends, as one of them, where will you go?
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