Cost Pressure has Increased Sharply, and Many Polyester Companies are 'Warming Together' to Cope with High Inventory

The cost pressure has increased sharply, and the downstream directly called "can't afford to hurt", how to "tack hard", polyester enterprises can't sit still, "reporting to the group to warm up" is the best policy at the moment.

Discuss the countermeasures of "tackling difficulties", polyester may welcome "limited production and guaranteed price"

According to market sources, many companies in the polyester industry will hold meetings to discuss countermeasures on the supply side. Futures Daily reporters also confirmed from the market that in order to cope with the high price of raw materials, some polyester manufacturers will discuss countermeasures on Friday and Saturday.

According to people familiar with the market, the discussions are mainly based on large-scale filament factories. At present, the average inventory of filament enterprises exceeds 30 days. After summer, the market enters the traditional off-season of the industry, and the inventory pressure of polyester factories will increase.

"Recently, the price of PTA has continued to rise, and polyester production and sales have improved in stages, but it has not been able to form a trend of polyester inventory." Chen Sheng, a PTA analyst at Guomao Futures, told the Futures Daily reporter that the continuous loss of filament has already affected the factory. Operation creates pressure. Downstream orders are sluggish, and it is difficult for polyester products to form a benign price increase to go to the warehouse, and the phased improvement in production and sales is only the transfer of inventory, which has not been digested by the terminal. In summer, the textile industry encounters a cold winter.

During the interview, the reporter learned that it has become the norm for polyester factories to hold meetings to discuss industry countermeasures.

Generally, when the contradiction between upstream and downstream of the industry is intensified, and there are certain risk factors in the later stage, manufacturers jointly discuss the next production and sales strategies, and reasonably control the risks of the enterprise.

"Companies often choose to encourage downstream purchases through supply-side joint production cuts or price promotions when inventory is high and losses are large, reducing the inventory pressure of the polyester industry and making their industry more benign." Tianfeng Futures Analyst Liu Siqi said that the previous joint production reduction and promotion had a certain effect. The joint production reduction eased the supply pressure, the promotion increased the enthusiasm for stocking of weaving raw materials, and the polyester inventory was relieved to a certain extent.

The reporter learned that the background of this meeting is different from the past. Previously, the polyester factory was mainly dealing with the problem of high inventory. At present, the polyester factory is also affected by the sharp increase in the price of raw materials, and the cash flow of the factory is seriously tested.

In the eyes of market participants, at present, the price of PTA raw materials remains high, and it is imminent for polyester manufacturers to reduce the existing inventory by reducing the load.

"After the Spring Festival, the inventory of polyester and polyester continued to rise. There was a brief decline before May Day, and then it rebounded again. Although the load of polyester installations has dropped to a low level, the inventory is still at a high level." SDIC Anxin Futures Analyst Pang Chunyan said.

"At present, the inventory of the entire polyester chain is at a high level, and yarn enterprises have suffered losses in production, and the cash flow loss is around -200 CNY/ton. Although the rise in raw material prices has driven some speculative demand, the inventory of yarn factories for nearly a month has been Overdraft the market demand ahead of time. Textile export orders have been transferred outward, domestic demand has not yet recovered, and the future orders are doubtful, and the continuous accumulation of inventory has formed a 'barrier lake'." Chen Sheng said.

It is understood that the profits of the polyester industry chain are concentrated in the upstream PX link, and the PTA, polyester, and weaving links generally suffer losses.

"Due to the increase in the price of PX, the processing fee of domestic PTA has been significantly reduced, and the spot processing fee of PTA has been less than 200 CNY/ton. The extremely low processing fee has caused some PTA manufacturers that have completed technical transformations to still be reluctant to open the device for production. , the load of the domestic PTA plant is low. The operation of polyester factories is differentiated, and the bottle flakes are operating with high profits and high profits; the short fiber inventory is generally low, and the profit is low; It is difficult to raise prices." Chen Sheng said.

In Liu Siqi's view, in the first half of the year, the polyester market has maintained a pattern of "strong upper and lower weak". Recently, the raw material has risen sharply, the demand side has not driven the price, the price increase is limited, and the profit has been compressed again. The overall load of polyester and weaving is not high, and the polyester factory is willing to protect the price through "limited production". Liu Siqi said.

In fact, in recent years, the production capacity concentration of polyester filaments has increased significantly, and the geographical distribution has also been relatively concentrated. When the market situation is poor, there have also been cases where companies actively reduce production, and the effect depends on the upstream and downstream supply and demand. Matching degree.

According to Pang Chunyan, when the price of PTA rose rapidly in 2018, the downstream could not bear the rapid rise in the price of PTA, and the terminals cut production. Before the National Day that year, the operating rate of polyester dropped from a high of over 95% to below 80%. After that, the negative feedback of the industrial chain caused the price of PTA to drop from a high level in mid-October. "Last year, there was also a case of joint production reductions by enterprises, mainly due to high inventory and poor profits. The production reduction is conducive to the reduction of enterprises' inventory pressure." Pang Chunyan said.

The superimposed cost of terminal consumption rises, and the downstream negative feedback intensifies

It is worth mentioning that in the polyester industry chain, every time the news of the polyester factory negotiation is exposed, usually the downstream market will react.

"Generally speaking, the procurement of the downstream market the day before yesterday will usher in a phased procurement boom due to the later meeting. However, compared with the previous situation, after the news of this meeting broke out, on June 9, the downstream market of polyester generally The performance is average, and the production and sales are still maintained at 2-30%." said Zhang Qiang, director of the China Silk Capital Network Collection and Editing Center.

In fact, starting from the end of May, the inventory of weaving raw materials has been maintained at a very low level for 3-5 days. It is expected that the price of raw materials will continue to rise. Weaving just needs to purchase and superimpose speculative stocking, and the stocking of raw materials will increase rapidly. Some weaving factories stock up from June 25 to the end of the month, and stock up for more than half a month. "After the weaving and stocking picked up, the enthusiasm for purchasing high-priced raw materials slowed down, and the production and sales performance was average." Liu Siqi said.

In this regard, Zhang Qiang also explained that with limited funds, raw material procurement in the downstream market is still cautious. Due to the previous price increase, part of the downstream has been purchased. At present, the raw material has increased by nearly 20%, and it is difficult to continue to follow up. "Take grey cloth as an example, according to the current raw material prices, the spot production of grey cloth is mostly on the verge of profit and loss, and the rising speed of raw materials is too fast, and there is no good transmission, and the price is gradually decreasing in the downstream, which is more conducive to short-term The grey fabrics are shipped, and there is no desire to continue purchasing.”

Due to weak terminal demand, the price in the transmission of the industrial chain is more difficult to transmit the further downstream.

According to Ni Guomiao, senior analyst of Huarui Information, the price of the industry chain has risen in this round, and polyester filament has risen by nearly 2,000 CNY/ton since the beginning of May, while the actual transaction price of conventional knitted grey fabrics has increased by only 700-800 CNY/ton. The loss of buying now and doing it now has increased significantly, which also forced downstream terminals to reduce the start-up.

Zhang Qiang also admitted that under the high cost, the transmission of the polyester industry chain gradually decreases from the upstream, and the industry chain is difficult to consume at the end. Based on the cautious performance of the industry chain in recent years, the company's own raw material inventory is low and finished product inventory is high in the industry chain.

In his opinion, the current increase in raw materials is more to fill up its own raw material inventory. Based on the factor of low raw material inventory, there is indeed room for the current increase, but when it comes to the terminal, the order will not be paid, and the order will only be placed more cautiously. "If consumption or policies are not boosted in time, if the inventory of raw materials in the middle part is full, it will inevitably lead to further deterioration of procurement, resulting in the reduction and shutdown of intermediate polyester and weaving." Zhang Qiang said.

As for the "badness" of downstream terminals this year, industry insiders generally believe that there are many reasons.

On the one hand, the epidemic and the Russian-Ukrainian war have led to the obstruction of orders, the skyrocketing shipping costs, and the impact of orders in Southeast Asia and its own overcapacity.

"At present, with the improvement of epidemic prevention and control and the superimposition of the 618 e-commerce season, orders in the domestic trade market have increased, and some orders have been placed in autumn and winter, but mainly for winter down jacket fabric samples and sales samples, and there are not many orders placed in large quantities. It mainly focuses on the transactions of mainstream fabrics such as T400 and high-elasticity." Zhang Qiang said.

On the other hand, the demand for clothing in the foreign trade market is improving, coupled with the depreciation of the RMB and the decline in the exchange rate, which has stimulated exports to a certain extent.

"Foreign clothing brands have experienced the order mode of controlling inventory in 2020 and 2021. There is not much inventory on hand, and they are more optimistic about fabric procurement." Zhang Qiang said that although the order performance was not as good as the same period last year, the overall performance was acceptable. Due to the rising sentiment of raw materials, the resistance of downstream users has been triggered. In his view, the high cost of raw materials has made some downstream users who have missing orders unprofitable.

The recovery of consumption is still weak, and it is helpless to reduce output

At present, the weak terminal consumption is an important reason for the blockage of cost transmission in the polyester industry chain and the poor overall performance of the industry chain.

"Entering May-June, as the peak of the domestic epidemic gradually passed, the superimposed and stable growth stimulus policies were continuously introduced, and the terminal demand improved marginally, but the improvement was limited. Driven by the recent surge in upstream raw materials, it has indeed forced some of the autumn and winter. The demand for grey cloth stocking has rebounded slightly for a short time, but the price increase of grey cloth is still very weak." Ni Guomiao said that with the easing of the epidemic and the continuous introduction of domestic policies to stimulate domestic demand, the market has positive expectations for terminal demand. However, in terms of rhythm, due to the lack of consumer confidence and the transfer of foreign trade orders, the rebound in textile demand in the second half of the year is not expected to be a 'V' shape, and the speed of polyester load and downstream start-up will also be relatively slow.

In his view, there are seasonal factors in the demand of the textile industry. After the easing of the epidemic in Jiangsu and Zhejiang in May, there is a trend of weak improvement in terminal orders.

"From the perspective of seasonality in previous years, this trend is expected to continue until late June, but from late June to August, the textile industry will enter a comprehensive off-season." Ni Guomiao believes that before the end of August, even if the market needs The general trend of recovery is relatively certain, but at least there should not be too much hope for the magnitude of improvement.

In this regard, Pang Chunyan also believes that the polyester industry chain is currently entering the off-season, and the real peak season in the second half of the year will not appear until around August. If there is no unexpected demand recovery, it may take a while for the downstream "hard days".

Market participants generally believe that the dilemma of high cost and weak demand is expected to run through the polyester industry throughout the year, and downstream losses and sales pressure will coexist. Then, the practical problem facing most downstream enterprises is: how to balance startup and efficiency, and where is the way out for downstream enterprises?

"Under the pressure of high inventory, companies can reduce output to slow down the backlog of inventory, but it also sacrifices output, which is also a helpless move." Pang Chunyan said.

In this regard, Ni Guomiao also suggested that in the real situation of weak demand, downstream enterprises can choose to appropriately reduce production according to their own losses and inventory conditions, and in the real situation of strong cost, according to their own orders and sales situation, in Appropriate market nodes should be selected and stocked in advance.

"In the future, the way out for polyester downstream will, on the one hand, lie in waiting for the return of demand for 'autumn and winter' orders in the second half of the year. Only when terminal demand is boosted and the industry chain is smooth can profits be restored; Under the cost, excess capacity will be eliminated, and the market will return to balance." Liu Siqi said.