Raw materials have skyrocketed in 2016. How will the textile raw material market perform in 2017?
2016Buy it in 2016 Earning money seems to be the unanimous view of most people in the industry, and some even said that the surge in fabric raw materials in 2016 may be just a “foreplay” for an even crazier year in 2017! Indeed, according to various current signs, the prices of some raw materials may reach another peak in 2017! While there have been some welcome changes in prices, with the overall rebound of commodities, the prices of some raw materials have also bottomed out! Based on the market recovery of various chemical fiber products over the past year, the editor will give you a preview of the products that may have a big market in 2017.
Crude oil: The rising process may be more tortuous, but the direction is good
We remain optimistic about the oil price trend in 2017. The main logic is that even without OPEC’s production reduction agreement, crude oil is already in a state of destocking and tending to balance supply and demand; OPEC and non-OPEC production reduction agreements will accelerate this balance.
From the supply side
We believe that OPEC and Russia will actually implement production cuts, but the intensity may be inconsistent with their commitments. Even if it is estimated at a 40% discount, there will still be a reduction of about 900,000 barrels per day, which will still be of great help in improving the balance of supply and demand. The production of conventional crude oil is relatively resilient, which is mainly related to the intensive commissioning of long-term projects in the past two years.
From the demand side
Crude oil demand continues to grow steadily, but it should be noted that the periodic replenishment in Europe and the United States, Trump’s fiscal stimulus plan and the improvement in liquidity brought about by rising oil prices will provide additional boost to demand, which may balance supply and demand. table further improvements.
Inventory
The destocking that started in 2016 may continue in 2017.
Political perspective
We should not just see the production growth brought about by Trump’s increased energy investment. The close relationship between the Republican Party and energy groups gives them an incentive to push up oil prices.
In summary, overall, we are optimistic about oil prices in 2017. The rising process may be more tortuous, but the direction is good.
Market prediction
1. The excess supply of crude oil will gradually ease in 2017, and rebalancing is expected to resume in the third quarter of 2017.
2. According to EIA forecast, the total demand for crude oil will rise to 97.68 million barrels/day by the end of 2017, and crude oil production will reach 98.1 million barrels/day.
3. The rebalancing of the crude oil supply and demand pattern will inevitably drive crude oil prices to rise slowly. It is estimated that the crude oil price center will move up to US$50/barrel in 2017.
Polyester: small downward space, great upward elasticity
From the perspective of the polyester segment, the industry has shown obvious signs of recovery. The demand side of polyester has generally maintained a slow and steady growth, but the growth rate of supply-side production capacity has further slowed down, and the overall supply and demand pattern has gradually changed. In addition, since 2016, as crude oil and bulk commodities have gradually rebounded, product prices have fluctuated and moved upward. With inventory and asset appreciation, corporate operations have also improved.
Therefore, for listed companies related to the polyester sector, as the industry’s prosperity rebounds, the stock prices will also obviously benefit from it. Starting from the second half of 2016, with the substantial improvement in efficiency, the stock prices of listed companies related to the polyester industry have also gradually fluctuated and risen. Taking Tongkun Co., Ltd. as an example, as a large domestic polyester filament supplier, the profit situation has improved significantly in the second half of the year. The current stock price The increase has been around 50% from the low point, while the stock prices of other related listed companies such as Rongsheng Petrochemical and Hengyi Petrochemical have also increased by 40-60%. We believe that the prosperity of the polyester industry is expected to further improve in 2017. The main points are as follows:
From the supply side
Polyester production capacity will continue to expand in 2017sp;
Market prediction
The sticky short-term market ended on a high note in 2016, which also marked the beginning of 2017 and set a high starting point for market prices.
1. In 2017, my country’s sticky short-term industry has a capacity expansion plan of 180,000 tons. As the scale of spindles of yarn companies in Xinjiang gradually expands, the demand for short-cut yarn will maintain an incremental momentum. According to market understanding, the scale of spindles in Xinjiang is planned to reach 30 million spindles in the future, and the number of local cotton yarn spindles will also increase simultaneously. The differentiated products of sticky shorts have made steady progress, and the product varieties have become more abundant, broadening the application fields of sticky shorts. Downstream products, such as non-woven fabrics, etc., have considerable market demand and prospects.
2. With the simultaneous progress of supply and demand, coupled with the law of inertia of the market’s strong trend from 2015 to 2016, the overall performance of the sticky short-term market in 2017 is expected.
3. Environmental protection has an increasingly prominent impact on the sticky shorts industry. In December 2016, the operation of sticky shorts manufacturers in Shandong, Jiangsu, Sichuan, Anhui and other places was definitely affected. Due to the long-term downturn in the industry and environmental factors, there will be less pressure on production capacity in the future. The current industry concentration of viscose staple fiber is relatively high, with the top seven companies accounting for more than 70% of the market share. Viscose staple fiber manufacturers are relatively strong in this industry chain and have pricing power.
4. There will still be certain downward pressure on the RMB exchange rate in the future, which may continue to drive short-term exports. From January to November 2016, my country’s sticky short-term exports showed a pattern of rising volume and price, with the cumulative export volume increasing by 48.94% year-on-year. It is estimated that there will still be certain downward pressure on the RMB exchange rate in the future, and accordingly, it may continue to have a certain driving effect on sticky short-term exports, supporting The actual production, sales and price of sticky shorts manufacturers.
Postscript
The “frozen production agreement” implemented from New Year’s Day has a considerable impact on the fabric industry. The chemical fiber industry is expected to shift its focus in 2017; the disadvantages of cotton benefiting and the environmental protection issues of the viscose industry , will also restrict the focus of cotton textile raw materials. Therefore, overall, fabric raw materials will still be supplemented by fluctuations and dominated by gains in the new year.
Under the current strategic background of my country’s vigorous implementation of supply-side reform, the traditional fabric manufacturing industry will gradually reduce overcapacity, and the pace of structural adjustment of the fabric industry will accelerate. The long-term positive fundamentals have not changed, and there is still room for imagination in the fabric market in 2017.
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