Since May, polyester raw materials have encountered “extremely cold weather”! The “big brother” of polyester raw materials, oil prices, is helpless. International crude oil has been falling for half a month since April 17. As of May 4, crude oil WTI closed at US$45.31/barrel, a decrease from the closing price of US$53.76/barrel on April 16. Reaching 18.65%, the continued decline in oil prices in late April gave bad news to the polyester market.
PTA has been declining for many days. On the 20th, the main force of PTA broke through the 5,000-point mark in one fell swoop. The crazy market after the G20 in 2016 has all come back. Compared with this year’s high of nearly 6,000 points, it has dropped by nearly 1,200 points. It is an avalanche. The decline directly broke the myth of the skyrocketing price of PTA since the G20 in 2016. It was like going back to before liberation overnight. PTA used two and a half months of decline to eat up the previous five months of growth.
Ethylene glycol is also following closely behind. Currently, ethylene glycol is in a downward trend, and there is no clear signal to stop the decline in the downward channel. As of May 4, the main contract price of ethylene glycol in the electronic trading market is 5905 yuan/ton, which is 2,000 yuan/ton. At the beginning of the month, it fell by 2,395 yuan/ton, a decrease of 40.56%. The mainstream price in East China was 5,870 yuan/ton. This deep drop has basically given up the previous gains.
On the other hand, when polyester raw materials fell in April, the rebound in oil prices in the first half of the month and the holding of an industry meeting in the middle of the month unexpectedly supported a slight increase in the market. In late April, affected by the long-term decline of polyester raw materials, polyester filament prices also turned around and fell straight down.
Now the market has reached the beginning of May. I originally expected that the market would improve in May, but God seems to have made another joke on the market. On May 4, bulk polyester textile raw materials encountered “Waterloo” again, once again chilling the hearts of industry insiders!
Polyester raw materials encountered “Black Thursday”: oil prices fell nearly 5%, PTA fell sharply…
On the one hand, black commodity futures represented by iron ore set off a trend of lower limits in the daily trading on Thursday, with iron ore, rubber, hot rolled coils, and Zheng Chun mainly sealing their lower limits; rebar and coke closed down more than 6%, and coking coal fell 5.8%, and Shanghai Nickel fell 4.4%. The decline also continued on Thursday night, with iron ore’s decline widening to 6%; hot-rolled coil and rebar opened lower by 2.7% and 1.9%. As an important member of commodity futures, PTA futures cannot escape bad luck. PTA fell 108 points on Thursday, a drop of 2.16%.
On the other hand, crude oil sold off on Thursday. WTI June crude oil futures closed down $2.30, or 4.81%, at $45.52 per barrel. It fell 5% during the session, refreshing its low since November 30, 2016 to $45.41/barrel. Brent crude oil futures for June delivery closed down $2.41, or 4.75%, at $48.38 per barrel. It is close to the low since OPEC announced production cuts on November 30 last year.
Today, PTA fell again, reaching 4836 points by midday, a drop of 1.59%. The polyester filament market was also dragged down by this. In early trading, the quotations of polyester factory products generally fell by 100-300 yuan/ton, and the market was filled with sorrow!
Nowadays, the polyester and polyester market seems to be in the midst of a long cold wave. From this, we can’t help but ask, where will the market fall?
In the past, demand in the second quarter will be a process of turning from strong to weak, and many factors such as the difficulty in passing on the high costs of downstream factories in the early stage, the considerable profits of polyester filament production and the high start-up are considered. We believe that the polyester market is expected to be weak in the future. There may be a short-term rebound during the period, but the overall weakness may be difficult to fundamentally improve. The specific influencing factors are as follows:
1. The macroeconomic downturn has suppressed bulk commodities, and it is difficult for polyester raw material futures to make an upward breakthrough
April’s PMI was the lowest in seven months (China’s official manufacturing PMI in April (China Manufacturing PMI) was 51.2%, down 0.6% from the March high, the lowest point this year, and the market expected 51.7%), demand A further decline is expected; the Caixin manufacturing PMI also fell by 0.9 percentage points to 50.3%. On the other hand, expectations for the Federal Reserve to raise interest rates next month have increased, and commodities have generally been suppressed.
2. The terminal peak season has left, and market players are bearish on the market outlook
With the departure of the traditional peak seasons of gold, silver, and silver, the demand off-season from May to June is approaching. The downstream market, which was also uncertain in the early peak seasons, may experience a decline in orders. The industry is more worried about the sluggish sales of polyester in the later period, and With ample inventory and high profits, polyester filament manufacturers have no obvious plans to reduce their burden, which will inevitably lead to another increase in inventory. Therefore, they have bearish expectations for the future market of polyester raw materials.
3. Planned maintenance of over 5 million tons PTA device in May
At present, the processing fee of PTA is only about 300 yuan/ton, and PTA production losses are high. Under this pressure, PTA factories have successively introduced equipment maintenance plans, and some factories have advanced maintenance and extended the maintenance period. In May, some PTA devices were inspected, and the inspection intensity was slightly higher than that in April. It is understood that the main companies that have introduced May inspection plans include Yisheng Ningbo, Taihua Industrial and Zhejiang Liwan, etc., involving a production capacity of 5.25 million tons. In addition, there is no clear time point for the launch of new production capacity within the year, and the long-stopped devices Far East and Xianglu have no intention of restarting in the short term. In the current low processing fee state, the timing of starting the factory is not good, and it is expected that no new production capacity will enter the market in the short term. Therefore, under this support, there is limited room for PTA prices to fall, and the polyester market may be able to stop the decline.
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