Shaoxing’s 1.2 million-ton-a-year polymeric filament factory will begin reducing production by 200,000 tons on August 10. The restart time is to be determined, mainly involving FDY;
Huzhou No. 1 Factory plans to expand the scale of production reduction from August 16, with the total production reduction increasing from 120 tons/day to 270 tons/day, mainly involving polyester filament and short fiber;
A 200,000-ton polymerized filament unit at another factory in Shaoxing is scheduled to be shut down for maintenance on August 15, and the restart time is to be determined.
Recently, many polyester factories have issued production reduction notices, and polyester filament may usher in a production reduction storm.
Downstream demand weakened, polyester production and sales were flat
In late June, the market gradually entered the off-season, and the volume of gray fabrics showed a cliff-like decline fell. July is the slowest month. Many traders do not have large orders and only copy orders and proofs, making it difficult for weaving companies to ship gray fabrics. Under the pressure of capital and inventory, the demand for polyester yarns has further reduced. At present, the main focus is on digesting the inventory of raw materials on hand. The number of new purchases is limited, and the production and sales of polyester yarn are very flat. Even with the substantial growth of crude oil and PTA, the price of polyester filament has been unable to keep up, and the price has only been slightly adjusted. In August, with the correction of crude oil, polyester yarn once again experienced promotions. However, the downstream buying momentum is insufficient, and the production and sales of polyester yarn are only concentrated at 30%. Such a sluggish trading atmosphere shows that downstream demand is still poor.
Polyester promotion ends, inventory rises
Demand The most direct impact of the weakening is the continuous accumulation of polyester inventory. Judging from the statistics of China Silk City Network, the overall inventory of the polyester market is now concentrated in 18-28 days; in terms of specific products, POY inventory is around 15-24 days, FDY inventory is around 18-20 days, and DTY inventory is around 18-28 days. to about 21-30 days. Starting from July, polyester yarn stockpiles have become more and more obvious, and especially now, they have reached a high level. After the promotion of polyester yarn from April to June ends, polyester manufacturers have poor destocking effect, and polyester yarn will most likely still be in a cumulative inventory cycle in the coming days.
After the weekly promotion of polyester filament, production and sales began to slump. At this time, the purpose of some polyester factories to reduce production is to “Limit production and protect prices” while controlling inventory. But can the production reduction at polyester factories achieve the desired effect?
First of all, the scale of this production reduction is actually small. The production capacity involved is only 4 million tons, and this also includes the production capacity of polyester chips, bottle flakes and polyester staple fiber. If these capacities are removed, the actual polyester production capacity may be only about half of the 4 million tons. For the entire polyester industry, the reduction in this part of production capacity will hardly affect the entire output of polyester filament. The industry’s destocking will not have a significant effect and will only allow factories that have reduced production to ease their inventories.
Of course, the more important thing is downstream demand side. At present, the downstream weaving trade is still in the off-season. With the arrival of August, the market situation has not improved, and orders for autumn and winter fabrics are slowly being placed. Although domestic demand has returned to pre-epidemic levels, domestic demand has also declined in recent years, but the situation of oversupply has not been reversed. In terms of foreign trade, it has been affected by the overseas epidemic and has not recovered. Even due to the recent worsening of the epidemic, some regions have stopped accepting orders and orders have dropped.
Many cloth bosses said that this year’s sales were less than half of previous years, and traders were even more helpless. The stagnation of demand has caused textile companies to accumulate a large amount of inventory. Some weaving companies have tense capital chains. They have inventory but no money. In the end, they can only sell inventory at low prices or reduce production. Whether it is a shortage of funds or production cuts, they have hindered cloth owners from purchasing raw materials. Therefore, it is difficult for the production, sales and inventory of polyester yarns to improve significantly for a while.
Polyester itself and the downstream weaving market are both negative. This time some manufacturers have taken the initiative to reduce production, whether it is to reduce their own corporate risks or to attract more polyester manufacturers to join. Camp, support the price of polyester yarn. If more machine-made factories join the production reduction team, it may open up a new situation for polyester filament.
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