Recently, the polyester industry chain has begun a wave of price increases from top to bottom. The main MEG contract once rose to a record high of over 6,000 yuan/ton. PTA’s main 2201 contract rebounded from 4,900 yuan/ton to 5,200 yuan/ton. Judging from the intraday trend, the increase was obviously weak compared to MEG. While raw materials have risen sharply, downstream polyester prices have also risen simultaneously. Judging from the data, the price increase of filament yarn after the holiday is mostly 400-500 yuan/ton, while the increase of short fiber lags behind that of filament yarn, with an increase of 350-400 yuan/ton.
At the same time, although terminal operations have declined due to the impact of the dual control policy, downstream users have been affected by rising buying sentiment. There is a concentrated move to cover positions. Especially the week before the long holiday is also a time window for downstream stocking. The rise in oil prices has further stimulated downstream purchasing enthusiasm. The average filament production and sales on the 27th were nearly 300%, which also reflects that although the current textile market is not good, there are still expectations for the peak season. If the raw materials continue to rise, the stocking sentiment may be maintained.
It is worth mentioning that currently, the impact of dual control lasts from mid-September to after the National Day holiday, which coincides with the traditional peak season of the textile and apparel industry. The peak season consumption rhythm has been disrupted in recent years. It is understood that after the epidemic in 2020, orders broke out at the end of September and the entire peak season lasted until the end of the year, which was reflected in the recovery of domestic consumption and the growth of exports. The export situation is good this year, but domestic consumption is weak, and orders have been stable throughout the year, with no significant growth so far.
Although the market has entered the traditional peak season of “Golden September and Silver October”, there is no obvious rebound on the demand side. Instead, it continues to weaken, as if it has crossed autumn and entered winter ahead of schedule. Downstream weaving factories have insufficient orders and poor demand. Some major manufacturers lowered prices and sold goods, but sales were still lower than expected. Market risks are increasing. Most traders are also reducing yarn ordering, selling at reduced prices, and destocking. Early orders are also delayed in picking up goods.
Under the current “dual control” policy, the impact is greater the further downstream, especially after the Mid-Autumn Festival, the operating rate of polyester and textiles dropped sharply to the lowest level in the same period in recent years. The operating load in Jiangsu and Zhejiang regions all dropped below 50%.
However, according to the latest news, the power restriction order implemented in various parts of Zhejiang in September 2021 will end at the end of September.
Production is suspended and is expected to be discontinued until September 30.
In general, the new regulations of Zhejiang’s power restriction order in 2021 mainly involve multiple fields, mainly enterprises. It is understood that some enterprises said that they received verbal notices that they were expected to Production will resume on September 30. There is no document, but the details will have to wait for the latest official notification and arrangements.
“At present, the sales period of ‘Double 11’ is getting closer and closer. The power restriction policy disrupts the market rhythm. Orders placed under the premise of production compression may be reflected in October. Therefore, the fabric market may usher in a destocking cycle.” Industry insiders said that of course, it ultimately depends on the degree and duration of the power cuts. If the power cuts also have a great impact on the processing of terminal textiles and clothing, it may lead to a loss of pre-sale orders. Delivery time extended.
“From the perspective of supply and demand, the fundamentals of polyester are not particularly optimistic now.” Industry Devouring believes that downstream polyester and terminals are greatly affected by dual control, and once the load drops will continue to decline, but the current impact on upstream PTA and MEG is relatively small. “Now the price of raw materials can continue to rise following the cost side, which also reflects the market’s expectation that the peak season is approaching and demand will improve.” If the subsequent demand side can perform better, the price of polyester is still worth looking forward to. However, once peak season demand proves to be unsatisfactory, the negative feedback of demand may gradually affect upstream raw material prices.
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