On July 2, the opening ceremony of Xinjiang Aksu Yousheng New Materials nylon and polyester integrated project was held in Aksu Textile Industrial City.
It is reported that the project has a newly constructed factory building of 140,000 square meters, with 312 nylon spinning positions, 50 texturing integrated machines, 200 machine packages, 300 circular knitting machines, and 500 air-jet looms. After the project is completed and put into operation, it can achieve an annual output of about 50,000 tons of nylon and polyester, 20,000 tons of knitted gray fabrics, and 50 million meters of woven gray fabrics. The annual total output value is about 1.5 billion yuan, and it can create employment for about 1,000 people.
In recent years, the contradiction between supply and demand in the textile industry has become prominent, and the problem of overcapacity is serious. my country’s chemical fiber filament weaving production increased from 4.1 billion meters in 2000 to 52 billion meters in 2020, with an average annual growth rate of more than 13%. However, there are still industrial parks being developed across the country and production capacity is increasing.
This year, due to the severe lack of orders in the first half of the year due to the impact of the epidemic, upstream and downstream production capacity was severely overcapacity. At present, the downstream industry is gradually entering the traditional consumption off-season, and the cost side fluctuates widely, making it difficult to negotiate prices for new orders. In addition, inventory depreciation jointly inhibits the production enthusiasm of downstream texturing and weaving factories. In addition, the consumption of downstream raw materials has decreased, and the shipping pressure of polyester factories has increased. As a result, the supply of low-priced polyester filament yarns in the market has continued to increase, and the focus of market transactions has steadily declined.
Oil prices determine the trend of PTA
In the process of supply contraction, if PTA prices strengthen, it will inevitably lead to an increase in downstream polyester costs. In the context of a lack of significant recovery in demand, cost transmission will be blocked, which will cause the polyester link to be squeezed and production reduced. Overall, strong costs and weak consumption in the first half of the year have significantly squeezed profits for intermediate links. At present, costs are weakening, but demand has not yet picked up. The prices of intermediate chemicals such as PTA have passively followed the decline of raw materials. If we want to get out of the downturn, we need to see a rebound in downstream consumption after the cost drops.
Oil prices have fluctuated violently recently, and the chemical sector has also experienced greater fluctuations. For the polyester sector, on the one hand, the direction of oil prices still determines the absolute price trend. On the other hand, if oil prices stabilize, we need to pay attention to the enthusiasm of downstream stocking after the price plummets. Judging from the shipment volume of ethylene glycol in Zhangjiagang in the past two days, there has been a significant rebound.
The enthusiasm of downstream stocking is mainly related to the company’s expectations for the market outlook. If the oil price continues to be pessimistic, the downstream stocking may be cautious; if after the oil price plummets, the downstream companies are not optimistic about the downside space of the market outlook, then they will increase stocking on dips. 8 It is understandable to prepare for the peak season after the month. In the future, the polyester sector needs to focus on the inventory performance of each link, especially ethylene glycol and filament, which currently have high inventory pressure, and whether their inventory can be effectively eliminated. Once the inventory pressure eases and the polyester operating rate rebounds, it will have a boosting effect on the raw materials PTA and ethylene glycol, and the industry chain may form a periodic positive feedback.
It is difficult to destock polyester yarn
The consumption of downstream raw materials has declined, and the shipping pressure of polyester factories has increased. As a result, the supply of low-priced polyester filament yarns in the polyester filament market has continued to increase, and the focus of market transactions has steadily declined.
As far as the polyester market is concerned, the current supply contradiction in the industry chain is still prominent. The current main contradiction in the polyester market is that the high factory inventory of filament yarns has been difficult to remove, although the operating rate of the polyester industry has dropped to a low level.
In June, polyester filament output increased significantly, but downstream demand declined, resulting in unsatisfactory results in destocking polyester filament. The output of polyester filament in June was 3.1702 million tons, a month-on-month increase of 2.41% and a year-on-year increase of 1.39%. The month-on-month increase in output in June was mainly due to the fact that the three major mainstream polyester factories have successively increased the load of polyester filament devices by 20% since mid-month, involving a production capacity of approximately 4.24 million tons. In addition, there are also many polyester filament maintenance devices in June. Starting from the beginning of June, inspections of pipelines and other equipment in Changle and Ningbo areas have led to the continuous maintenance of Shanli, Jinlun, Quandi and other factory units, involving a production capacity of 1.4 million tons; starting from mid-June, Hengli’s 400,000-ton unit has been undergoing rotational maintenance. , Shenghong’s 200,000-ton and Rongsheng’s 100,000-ton units were inspected one after another. In June, downstream demand gradually entered the off-season, and the industry’s operating rate dropped to a low level. The increase in supply and the decrease in demand resulted in polyester filament factory inventories remaining at high levels in June. At the end of June, the polyester filament factory inventory was 29.27 days, a decrease of 1.53 days from the end of May and an increase of 1.33 days from the beginning of June.
There is a serious lack of orders in the weaving market
As we all know, the current gray fabric market production capacity is in a state of serious overflow. Through the data monitoring of Silkdu.com, we can get a gray fabric inventory chart from 2017 to the present. From the picture, it can be clearly seen that the weaving inventory has increased from 2018 to 2018. It began to rise in a straight line, which shows that the major turning point of capacity overflow was the wave of capacity expansion in 2018.
The inventory of gray fabrics in textile companies is still at a very high level, and many bosses have responded.�The gray fabrics produced during the gold and silver times cannot be sold, and now they can only be kept in stock. These fabrics have not even been circulated to traders, let alone warehoused to printing and dyeing factories. However, unlike gray fabrics, the characteristic of printing and dyeing is that it is finalized after dyeing and must be sold quickly, so the risk is greater in the middle end of the industrial chain. This is different from the more basic white fabric products. The white fabric is still in the raw material stage, just like a piece of white paper. It doesn’t matter if it is sold earlier or later, and it has a wider application range.
It can be seen from the monitoring data of Silkdu.com that the operating rate of downstream weaving enterprises is not high, and there is a slight downward trend. At present, there is no substantial improvement in domestic and foreign orders. In particular, polyester prices have dropped significantly recently, and downstream orders are more cautious. Therefore, the startup rate is low, at 65%. Market orders are scarce this week, and fabric merchants are less enthusiastic about stocking up. Therefore, gray fabric inventory has risen to about 36.8 days.
Summarize
As market macro-disturbances increase, and in a commodity bear market environment, domestic stimulus policies and the recovery of domestic demand will become an important driving force for the polyester industry in the future. Continuous losses in polyester varieties will cause polyester companies to conduct summer maintenance, reduce inventory pressure, withdraw cash flow, and wait for peak season demand to improve.
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