On September 5, the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC oil-producing countries held their 32nd ministerial meeting via video and decided to slightly reduce production in October, lowering the monthly average daily production for that month by 100,000 barrels. This is the first time since August 2021 that a major oil-producing country has lowered its monthly production.
After the news came out, oil prices rose sharply. U.S. oil WTI rose as much as $3.50, or 4%, and once rose above the $90 mark, recovering from losses since September 1. International Brent rose by nearly $4, or 4.3%, to a daily high of nearly $97, recovering its losses during the month.
Polyester raw materials rise across the board
At the same time, the domestic futures market rose broadly, with the energy and chemical sector turning red across the board, and PTA and ethylene glycol rising by more than 5%. The PTA futures price is 5,696 yuan/ton, an increase of 316 yuan/ton, or 5.87% from last Friday; the ethylene glycol futures price is 4,351 yuan/ton, an increase of 316 yuan/ton, or 7.83% from last Friday.
The main reason for this strong rise in PTA is not only the rebound in crude oil, but also the tight supply of PX and strong cost support. Domestic PX factories have reduced production rates and increased shutdown plans. Unexpected losses in domestic supply have made it difficult to recover in the short term due to overseas start-ups, resulting in tight PX supply.
Under PTA’s high-profile counterattack, polyester filament yarn is finally ready to go forward, ushering in a long-awaited price increase. Polyester raw materials rose sharply last Friday night, prompting some polyester filament factories to raise their quotations on Saturday. On Monday, the price of polyester filament continued to rise due to the tight supply of raw materials, and the price of polyester filament was raised again due to the cost side. On Tuesday, major polyester yarn manufacturers raised prices by another 50-150 yuan/ton. Polyester filament has really ushered in its third consecutive rise in prices.
Polyester filament prices have increased since last Friday. Specifically, POY150D rose from 7,900 yuan/ton to 8,100 yuan/ton, an increase of 2.53%; DTY150D rose from 9,400 yuan/ton to 9,600 yuan/ton, an increase of 2.08%; FDY150D rose from 8,425 yuan/ton to 8,625 yuan / ton, an increase of 2.32%.
Polyester production and sales increase but face serious losses
At the end of August, due to the intensive replenishment by manufacturers at the end of the month, production and sales suddenly jumped to 290%. Although this pulse of production and sales is only a flash in the pan, average weekly production and sales have increased since late August. Specifically, let’s look at the average production and sales in the last week of the month at 89.68%, while the average production and sales in the first week at the beginning of the month were only 33.12%, an increase of 56.56%.
Even though the price of polyester filament has been rising continuously, and production and sales are expected to improve significantly, in fact, its profits are a mess. According to statistics, polyester filament yarns of various specifications currently suffer significant losses. FDY150D has a loss of 308 yuan/ton, an increase of 406 yuan/ton from last week’s loss; POY 150D has a loss of 333 yuan/ton, a decrease of 417 yuan/ton from last week’s profit. Polyester filament suffered serious losses, mainly due to the rapid increase in cost-end crude oil and PTA. However, polyester filament inventory is still too high, and the increase is limited, which ultimately leads to continued compression of cash flow.
It may be difficult for gray fabrics to keep up with the rising prices.
Faced with such huge losses, polyester factories are under pressure and will gradually shift their cost focus in the short term. But unfortunately, downstream weaving companies, like polyester filament, are witnessing various price increases on the raw material side. They can only silently bear the cost pressure and also suffer losses. For weaving companies, it is almost impossible to raise the price of gray fabrics. Although the traditional peak season has arrived, good news came from the weaving end at the end of August and early September, and the shipment of gray fabrics began to loosen. Downstream fabric traders have received orders one after another, and some large orders have also begun to return. However, there are still many manufacturers taking advantage of rising demand to sell goods at low prices, causing the average market price to shift downward.
With the end of the orderly power consumption policy, the start-up of texturing and weaving companies has gradually returned to the level of the end of July, and the number of orders has increased, there is a certain replenishment demand on the demand side, which may have eased. The market outlook is cautious and the start-up improvement is relatively slow. Therefore, the growth rate of terminal demand is much smaller than the growth rate of supply. The game of cost and demand continues. Whether it is polyester filament or gray fabric, there is greater resistance on the way up.
Can the weaving market usher in a real “Golden Nine”? When will the price of gray fabrics rise aggressively?
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