Under The Double High Situation, Polyester Filament Load Reduction Will Expand The Scale?

Public health events at home and abroad are still fermenting, residents' demand for clothing, home textile and other non necessities continues to decline, domestic and foreign clothing and textile orders are decreasing, early orders are gradually delivered, subsequent orders are out of stock, textile enterprises are struggling, and polyester filament as textile raw material is also facing the dilemma of high starting and high inventory, the contradiction between supply and demand is prominent, and the expectation of reducing burden is intensified 。

According to the Convention, the summer is the low season of polyester filament demand, and the enterprise inventory will also reach the high point of the year. This year, affected by the public health events, the polyester filament has reached the high point of the year's inventory at the end of the first quarter and the beginning of the second quarter. A series of measures such as boosting the cost end in the second quarter and preferential promotion by enterprises have greatly reduced the inventory of polyester filament. Since the summer vacation, Shaoxing dyeing and printing enterprises have gradually increased the pressure of dyeing and printing enterprises in the lower reaches of the Yangtze River.

Figure 1 inventory comparison of mainstream polyester filament models from 2019 to 2020

Source: Longzhong information

Most textile printing and dyeing enterprises have replenished the raw materials of autumn and winter fabrics in advance at the end of the second quarter. Since July, orders of enterprises have been out of stock, and the inventory levels of cost and raw materials are on the high side. Some enterprises have reached the highest level in recent years. The willingness of enterprises to continue to prepare goods is not strong, and polyester filament enterprises are also facing the situation of shortage of orders.

Figure 2 start up trend of polyester filament industry in 2019-2020

Source: Longzhong information

As shown in the figure above, although the current start-up of polyester filament industry is lower than the level in 2019, for the current demand dilemma, the start-up of polyester filament industry is at a high level, and the supply pressure is prominent. Although some polyester filament enterprises have started load reduction mode since July, domestic leading enterprises have no clear willingness to reduce production and load. Therefore, partial load reduction is just a drop in the bucket. At present, the industry is still operating at over 85%. In this situation of high inventory and high start-up, and the proportion of the decrease in negative is less than 10%, enterprises choose the mode of profit giving promotion.

Trend of cash flow of filament in Jiangsu and Zhejiang in 2020-50f

Source: Longzhong information

As shown in Figure 3, since the end of the second quarter, domestic polyester filament prices have been declining, but since the third quarter, the cash flow of most polyester filament varieties has been in deficit. Take poy150d / 48F as an example, the cash flow maintained at around 300 yuan / ton in the middle of June, and continued to narrow after the end of June. The cash flow was in a loss situation in July, and the cash flow loss was more than 400 yuan / ton by the time of publication.

It is understood that in June, the total retail sales of clothing, footwear and knitwear were 105.9 billion yuan, a decrease of 0.1% compared with the same period last year. From January to June, the total retail sales of shoes, hats and knitwear were 512 billion yuan, a decrease of 19.6% over the same period. However, the export situation of clothing, home textiles, shoes and hats and other terminal fields is not optimistic. Several fashion clothing brands in the United States have cancelled autumn and winter orders. Among them, American sports giant Nike said it had cancelled about 30% of factory orders before the autumn and end of the year shopping season, and Ralph Lauren, the US fashion luxury group, said it had cancelled about two-thirds of autumn orders. The double decline of domestic and foreign trade orders has further intensified the contradiction between supply and demand of textile raw materials such as polyester filament. Enterprises in downstream weaving and other fields are more and more willing to reduce production, reduce load and have holidays. Polyester filament enterprises are still sticking to it. At present, there are more and more rumors about the burden reduction of polyester filament enterprises in the industry, and people in the industry also pay close attention to the situation of production reduction and load reduction.

According to Longzhong's understanding, at present, some polyester filament enterprises have certain production reduction expectations, but they have not announced the specific implementation time and the scale of production reduction and load reduction. Most enterprises are still in a wait-and-see period. In the future, the demand and inventory situation will be followed up to consider production reduction. Therefore, in the short term, the start-up rate of polyester filament will remain high. At present, the trend of raw materials PTA and ethylene glycol is relatively strong, which gives certain support to the polyester filament market, and the high load operation of polyester filament also supports the price trend of raw materials to a certain extent. The two support each other. If the load reduction process and scale expansion speed of polyester filament and even the whole polyester variety are too fast, it is very likely to lead to the collapse of the whole industry. Therefore, polyester filament enterprises or delay the process of load reduction, the industry will start in July will still be more than 80%.