The situation between Russia and Ukraine continues to deteriorate!
According to CCTV News, on the 24th local time, Putin delivered an emergency live television speech on the situation in Ukraine and stated that he had decided to conduct a special military operation in the Donbas region. According to Russian media reports, the Russian army has broken through the Kharkiv state border. Ukrainian army command posts in Kiev and Kharkiv were attacked by rockets.
As geopolitical tensions continue to intensify, supply in the crude oil market becomes increasingly difficult. Brent crude oil and WTI crude oil futures prices both exceeded US$100 per barrel and hit a seven-and-a-half-year high.
On the 25th, polyester filament prices experienced general gains.
The price of polyester yarn from a factory in Shaoxing increased by 100-200 yuan;
The price of polyester filament from a factory in Zhejiang was raised by 50-100 yuan;
The price of polyester filament from a factory in Jiangsu increased by 100-200 yuan;
The price of polyester filament from a factory in Tongxiang was raised by 50-100 yuan;
…
After this round of price increases, polyester yarn production and sales were very sluggish, only at 36%. Due to centralized purchasing on the 24th, production and sales were low.
However, I don’t know if you have noticed that it is difficult for polyester factories to stimulate downstream purchasing enthusiasm regardless of promotions or price increases. Since February 15th, polyester has been on sale for many days, but the production and sales of polyester factories are not as high as expected, and can even be described as light. On the one hand, since 2019, weaving manufacturers have formed the habit of purchasing raw materials as they are used. No matter how the price of polyester filament fluctuates, it is difficult to stimulate manufacturers’ desire to stock up. On the other hand, last year, due to the epidemic, terminal demand failed to rise, which made it generally difficult to collect receivables in the textile market. Naturally, the money on hand was stretched, and even if you wanted to buy more raw materials, you were unable to do so.
The editor also asked several cloth bosses about their views on the surge in raw materials. Most of them said that funds are tight now and they would not dare to risk stocking up on too many raw materials unless orders come in. A weaving boss said: “There has been a sudden increase in orders in recent days, but even so, I dare not stock up on raw materials. The main reason is that I am not optimistic about the raw materials. Now the terminal demand has only improved slightly, and the risk of stocking up is too great.” , not worth the risk.”
When crude oil is still rising crazily, polyester filament yarns will not have offline promotions regardless of profits, even if they are in high inventory. The round of price increases on the 25th may confirm this statement, and polyester filament will begin to enter the upward channel. But what is the future direction of polyester filament?
Downstream orders are average, and demand for polyester yarn is flat.
The gray fabric business was good at the beginning of this year, and we received many new orders as soon as we resumed work. But no one expected that the sudden epidemic disrupted the market rhythm and the order-taking atmosphere dropped. Although the epidemic has not affected the industry’s resumption of work on a large scale, from the perspective of the entire Jiangsu and Zhejiang textile markets, demand will still be affected by other aspects after the start of the new year, and some companies still report that the current order situation is average. As a result, enterprises have become more cautious in purchasing, and no longer consider replenishing goods in large quantities for a long time, but mainly choose to purchase goods in small quantities and with low frequency. Although polyester yarn is on sale, it is still at a high level in recent years. In addition to a small increase after the beginning of the new year, it is even more difficult for gray fabrics to rise again. Many textile people have reported that profits have been compressed. Therefore, under the influence of factors such as fluctuations in raw material prices and holding costs, and confusion in market orders, there is a question mark on the arrival of the subsequent peak demand season.
Crude oil is expected to reach US$120/barrel, and the cost side is strong
Bank of America expects Brent crude to reach $120 per barrel by mid-2022, with fundamentals justifying the recent rise in oil prices. From the cost side, with the crazy crude oil and strong cost side, it is impossible for polyester factories to promote without any lower limit regardless of profits. Therefore, the editor boldly predicts here that polyester filament will enter the upward channel again in the short term.
The traditional peak season of “Gold, Three, Silver and Four” is coming
Then March is about to enter, which is the arrival of the traditional peak season of “Gold, Three and Silver”, which may make the market popular again. Although this year’s peak season can meet the standards of the peak season, according to convention, it will be better than February anyway. Therefore, downstream demand will also improve, with increased demand and reduced inventory, paving the way for polyester factories to increase prices.
Looking back on 2018, since the gray cloth inventory of weaving companies has basically been eliminated, even if the cloth produced by textile companies cannot be sold, it can be used as inventory, and there will naturally be no shortage of demand. In 2018, the craziness of raw materials ended with chicken feathers all over the place. After the increase in raw materials, there was an “avalanche”, and the prices went straight up and down. At the same time, it also brought down the weaving market to a certain extent. Nowadays, we need to be wary of the recurrence of history. Crazy endings often end in a mess.
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