Today’s polyester prices are stable, and downstream production and sales have picked up. According to estimates, as of 5 pm yesterday, the production and sales of most factories had increased compared with the previous period, with the highest reaching about 200%. However, the overall inventory level of polyester factories is relatively high, and destocking will still become the mainstream view in the market in the near future.
Since the second half of last year, the cash flow of PTA’s downstream polyester products has continued to improve, and polyester filament products and polyester staple fiber products have been able to maintain positive cash flow most of the time. Especially in mid-December last year, the profit level of polyester products continued to rise after a sharp rise in prices. Although there was a decline before the Spring Festival, polyester prices continued to rise after the holiday, and cash flow quickly recovered. Driven by good profit levels, the polyester operating rate rebounded rapidly after the holiday. As of late February, the polyester operating rate had rebounded to a high of over 86%, which was higher than last year’s full-year high.
However, while the operating rate of polyester has rebounded, the operating rate of its downstream loom factories in Jiangsu and Zhejiang has not rebounded accordingly, which has caused the inventory of polyester and polyester products to continue to increase. Polyester product inventories have been increasing since New Year’s Day this year, and as of mid-March were close to the high point in the middle of last year. The price reduction promotion that started in late February did not change the trend of inventory accumulation, thus aggravating the market’s concerns about high polyester inventory. Coupled with the sharp decline in the upstream raw material period and spot prices, PTA gave up its gains since late November last year in three trading days. Therefore, this price adjustment is the result of the accumulation of negative fundamentals in the industry itself, and it is also an inevitable step to eliminate bubbles. process!
Although polyester prices have begun to fall back, this is only the tip of the iceberg of the entire bubble. The current price reduction is far from reaching the psychological price of downstream weaving manufacturers. Since the second half of 2016, the price increase of some raw materials has exceeded about 25%. Such a high increase must be the price reduction that downstream manufacturers are looking forward to. Therefore, they are not tempted by the current correction and are not in a hurry to replenish their inventory. Paying attention to the rationality of the price should be the purchasing strategy of those rational buyers!
In terms of the upstream raw material PTA, although the negative effects were exhausted and technical corrections triggered a correction, the sharp drop in crude oil further aggravated the market selling pressure, and PTA futures experienced a rare continuous sharp decline.
However, judging from OPEC’s statement, crude oil production restrictions will continue to be implemented. The further decline in crude oil prices caused by the increase in U.S. production and inventories will only make the center of gravity of crude oil prices fall back, and it is difficult to bring about a trend decline. The bubble accumulated in the early stage of the PTA market has basically been squeezed out. Even if the polyester operating rate drops, it will not have a big impact on PTA in the next small peak textile season, and the PTA market outlook is still optimistic. Therefore, under this market situation, how long the current polyester price trend can be maintained or how much room there is for further exploration depends entirely on the market!
</p
