Downstream demand shrinks, polyester industry chain is hard to see improvement i

Summer is approaching, the market of the apparel market at the terminal of the polyester industry chain is still deserted, the superimposed cost support is weak, and the overall industry chain is still difficult to see improvement. On May 6, the average price of polyester (PET) market was 5275 yuan (ton price, the same below), down 19% from the beginning of the year.

Terminal consumption shrinks, downstream demand declines
Polyester products are mainly divided into fiber grade PET, bottle grade PET and film grade PET, which account for 70%, 25% and 5% respectively. Among them, fiber-grade PET is the main application field of polyester products, and the trend of its demand-end textile and apparel market determines the overall market trend of the polyester industry chain.

As can be seen from the announcement issued by apparel retail companies, the retail sales of well-known brands such as Anta in the first quarter decreased by 20% to 30% compared with the same period of last year, and individual companies even exceeded 50%.

"In fact, affected by the Sino-US trade friction, the apparel industry has been sluggish since last year. Even the peak consumption season of the Spring Festival this year has not improved. Before and after the Spring Festival, the new crown pneumonia epidemic began to spread in China, and the textile market suffered delays in reinstatement The operating rate has always been at a low level. "Zhang Lu, an analyst at China Textile Network, said that due to the low end demand, weaving manufacturers have high inventories of grey fabrics.

According to the statistics of China Silk Capital, the inventory of grey cloth of enterprises in Shengze area of Zhejiang Province has risen to 43 to 44 days, surpassing the highest inventory point last year.

Foreign trade is also not optimistic. According to statistics from the General Administration of Customs, in the first quarter of this year, the cumulative total exports of textiles and clothing nationwide fell by 17.7% year-on-year. Among them, the cumulative export value of textiles was US $ 22.694 billion, down 14.6% year-on-year; the cumulative export value of apparel was US $ 22.57 billion, down 20.6% year-on-year.

"Although the demand for non-woven fabrics as a basic raw material for epidemic prevention materials has increased during the epidemic, it only accounts for 5% of the downstream demand for polyester. It has limited boost to the overall demand of the industry and it is difficult to change the general situation of shrinking polyester consumption." Zhang Lu introduced.

Judging from the post-holiday market, most textile companies have planned to shut down for 1 to 3 weeks due to scarce domestic and foreign trade orders and high inventories. According to the statistics of Zhuo Chuang Information, the starting load of looms in Jiangsu and Zhejiang is currently around 48%, and it is expected that it will drop to below 40% after the holiday, and the industry demand will be further reduced.

Crude oil fluctuates at a low level, cost support is weak
From the cost point of view, the prices of two major raw materials for polyester production, PTA and ethylene glycol, are affected by crude oil price changes. The international crude oil market that has been hit by "negative oil prices" has not yet seen a clear sign of recovery.

In May, although the OPEC + production reduction agreement has officially come into effect, and the supply of 9.7 million barrels will be reduced daily, ConocoPhillips and other companies have also announced plans to reduce production voluntarily, but this largest production reduction agreement in history is still not as expected.

Crude oil is the source product of the polyester industry chain, and its continuous low market price will shift the center of gravity of the industry chain cost.

Crude oil prices fell, and naphtha and PX also fell simultaneously. PTA companies' profits improved and production enthusiasm increased. The high start and high inventory status will cause the PTA market, which is close to historical lows, to continue to face greater downward pressure.

In addition, driven by the decline in oil prices, the corporate profits of the oil-to-ethylene glycol route have improved, the enthusiasm for production has increased, and the supply has increased. The market will remain at a low range mainly for shocks, making it difficult to bring cost support to the polyester market.

Centralized upstream production and overall supply rise
The basic law of the development of the polyester industry is the repair of benefits-expansion of production capacity-oversupply-accumulation of inventory-falling into losses-reduction of production and burden. 2019 is the second year of the centralized production of the polyester industry, and this year's new capacity is still more.

First of all, the PX-PTA industry chain has entered a peak period of new capacity launches. According to Wang Yao, a PTA trader in Liaoning, Sichuan Nengtou Group's Nanchong 1 million ton / year PTA plant and the new Fengming 2.2 million ton / year PTA plant have been put into production in 2019.

With the weakening of downstream polyester demand, PTA's social inventory began to enter the accumulation phase. At present, the domestic social inventory is 3.283 million tons, which is the highest level in the past 6 years. Moreover, this year's PTA plans to put into production new production capacity of more than 10 million tons / year, supply pressure has increased significantly.

Secondly, the ethylene glycol project will also enter the peak period of production, and the new production capacity is expected to reach more than 6 million tons per year during the year. Especially in the current situation of falling crude oil prices and rising profits of oil-based ethylene glycol companies, the industry has a positive attitude towards production. After the implementation of the new production capacity, it will cause supply pressure on the industry chain.

On the whole, there is no turning point in the current global epidemic. With the demand side still sluggish, the superimposed cost side support weak, and the fundamentals of increased industry supply, the polyester industry chain will take time to get out of the predicament.