International crude oil has continued to fall recently. WTI crude oil fell below the US$80/barrel mark today, which affected the whole world. Today, the entire polyester industry chain is full of green.
Crude oil plunge brings collapse of polyester industry chain
International oil prices fell significantly overnight yesterday. As of the close of the day, the main contract of WTI crude oil futures closed at US$77.37/barrel, a decrease of 4.27%; the main contract of Brent crude oil futures closed at US$81.61/barrel, a decrease of 4.19%.
A drop of more than 4% directly collapsed the polyester industry chain. Today, the industry chain is full of green. With the current demand side being relatively weak, the cost side has become the main driver of price fluctuations.
PTA futures fell by 1%, and the overall price of polyester yarn dropped by about 100 yuan/ton. Many people have questions, why is it that this time, despite the strong geopolitical conflict, it has not driven up the price of the industrial chain as before?
The drop in crude oil this time was mainly caused by various negative factors, directly erasing all the gains since the outbreak of the current conflict between Palestine and Israel, and the price fell to a new low in three and a half months.
But in fact, for textile companies, raw material fluctuations are actually the last thing they want to see. The person in charge of a trading company said: “With raw material fluctuations, price increases will not increase my quotation, but price decreases will allow customers to lower my prices.” argument.”
So now that the demand side cannot give the market enough stimulation and raw material prices follow the cost side, let me tell you about the current trend on the cost side.
Crude oil will always rise
Although it seems that crude oil continues to fall, in fact, there are some game factors. From the current point of view, both supply and demand are intertwined with long and short, and the market will remain volatile.
The market has shown weakness recently due to geopolitical tensions. The crude oil supply in the Middle East has not been significantly affected in the short term. However, due to the seasonal decline in internal demand in the Middle East, its export share has increased.
Data show that OPEC crude oil exports have increased by about 1 million barrels per day since hitting a low in August, which has alleviated to a certain extent the pressure on the market to tighten supply caused by geopolitical tensions in the Middle East.
But high oil prices are the trend in the future. Oil sellers always hope that prices will rise more. Now the prices are firmly suppressed by pressure from all parties. Now they are just accumulating strength and energy to continue rising.
The polyester market is full of chicken feathers
The cost side is booming, but the polyester market is really just a piece of cake. In the past, rising prices and falling prices always stimulated production and sales, but now it has no use. Today’s production and sales are only 99.5%, not even over 100. So why don’t downstream weaving companies buy orders from polyester factories now?
1. The position has been covered last week
Last week, under the impact of the sharp decline in the raw material market and near the end of the month, regular replenishment of positions was carried out. Most weaving manufacturers had more or less purchasing operations, and the production and sales exceeded 400% that day. In this year’s bad environment, the order volume of weaving manufacturers has been significantly reduced this year, and the inventory has also increased a lot compared with previous years. However, business is now difficult to do, payment collection is delayed, and the financial pressure of enterprises is generally higher under the influence of various factors. Large, not enough to support replenishment in the short term.
2. Terminal demand is always insufficient.
Whether the business of the weaving factory is good or not depends most mainly on the demand of the terminal clothing market. At present, clothing fabric manufacturers mostly place orders in the “small order, multi-batch” mode, which shows their cautious attitude. The temperature has been unable to drop before, down jackets are difficult to sell, and the clothing industry is not very optimistic at present. Maybe they are also facing a major adjustment in the pattern, and maybe clothing consumption will also usher in a recovery, but this cannot be achieved in a short time. Therefore, at present, the demand for clothing does not support raw materials obviously.
It can be seen that whether raw materials rise or fall, a lot of people will be “hardly killed”, and the polyester factory has no choice: I will follow the raw materials anyway, and it is your business to buy or not.
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