On the evening of July 7, the settlement price of international crude oil futures closed sharply higher. WTI August crude oil futures closed up US$4.2, or 4.26%, at US$102.73/barrel, returning to above US$100. ICE Brent crude oil futures for September closed up $3.96, or 3.93%, at $104.65 per barrel.
Recently, international crude oil has experienced sharp rises and falls, most commodity sectors have bottomed out and rebounded, and some oversold varieties have experienced retaliatory rebounds. With the decline in crude oil prices, the price focus of industrial chain products PX and PTA has shifted downwards, and the PTA market structure is acceptable. However, the market situation of polyester filament yarn is not optimistic. Although the operating rate of the polyester industry has dropped to a low level, the high factory inventory of polyester filament yarn has been difficult to remove.
Downstream weaving, printing and dyeing are in the traditional off-season. As the off-season deepens, the operating rate continues to decline. According to the monitoring of China•Shengze Silk and Chemical Fiber Index by the Ministry of Commerce, the monthly prosperity index of Shengze market declined in June. Data shows that the overall market sentiment index in June 2022 was 92.97 points, a decrease of 2.81 points or 2.93% compared with the same period last year. This year’s data is significantly lower than the same period in previous years. The overall performance is that the bottom-up capacity utilization rate of the industrial chain is at a low level. In the final analysis, consumption is still weak. Although exports are resilient, the overall growth rate is declining.
June is the traditional off-season, the order-taking atmosphere of enterprises has dropped, and the overall transactions in the upstream and downstream sectors have been sluggish. Domestically, new orders are limited and sporadic, and are even in a long-term wait-and-see state. From abroad, orders began to be placed domestically, with a slight increase in volume. In terms of raw materials, the focus of polyester filament has shifted downwards with the decline in international crude oil prices. Downstream companies are cautious in purchasing and production and sales are average.
01Crude oil continues to fall, polyester raw materials decline
Since mid-June, comments made by Federal Reserve Chairman Powell have heightened concerns that U.S. interest rate hikes will slow down economic growth. Data from the American Petroleum Institute showed that U.S. crude oil inventories increased last week, and international oil prices continued their decline. The price of polyester raw materials subsequently lost cost support and fell. However, the downstream has gradually entered the traditional off-season. Even though polyester factories have promoted many times, weaving companies are still not very enthusiastic about purchasing, and polyester production and sales are average.
02 Entering the traditional off-season, downstream demand decreases
Since June, the epidemic has been significantly controlled, government departments have made every effort to open up logistics channels, and transportation has returned to normal. However, the traditional off-season has soon ushered in. Clothing orders from downstream garment manufacturers and home textile manufacturers have weakened. The textile market has a strong wait-and-see attitude. Most customers just need to make samples and receive goods, and no substantial bulk orders have been issued. Foreign trade orders have been conveyed slightly, and some urgent orders for autumn and winter clothing from European and American countries have been placed. The delivery time has been shortened, and most of them are urgent orders. The follow-up sustainability remains to be seen.
03 Enterprise capital chain is tight and operating pressure is high
Affected by the epidemic this year, the overall market order performance is poor, and many weaving companies are under greater financial pressure than in previous years. On the one hand, it is difficult for factories to balance production and sales, and inventories continue to rise, occupying corporate liquidity; on the other hand, raw material prices are rising, and payment recovery is slow. , the capital turnover pressure of enterprises is greater. The overall market lacks hot-selling fabrics and profits are sluggish. Most companies report shipping at a loss. Therefore, the capital chain is very tight and operating pressure is extremely high.
Summarize
Taken together, the overall market conditions declined in June and the number of orders decreased. The off-season will continue in July, and there is a possibility of further decline. International oil prices are also falling, costs are loosening, and polyester raw materials are declining again. The market lacks boost from hot-selling fabrics, and foreign trade orders are greatly affected by the return of orders to Southeast Asia. With high costs and low demand, the market may be difficult to improve in July.
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