With the arrival of the peak consumption season of “Golden Nine and Silver Ten”, PTA terminal demand has recovered, and there is also support on the cost side. However, high inventory in the industry chain and slow recovery of the industry will still restrict PTA prices.
Global market sentiment is recovering
Since the beginning of this year, the global textile and apparel market has declined sharply compared to previous years. Customs data shows that in July, my country’s textile and apparel exports were US$31.294 billion, a year-on-year increase of 13.74%. Among them, the export value of textiles (including textile yarns, fabrics and products) was US$15.9769 billion, a year-on-year increase of 48.38%; the export value of clothing (including clothing and clothing accessories) was US$15.3175 billion, a year-on-year decrease of 8.54%. In April, May and June, the year-on-year growth rates of textiles were 49.36%, 77.34%, and 56.72% respectively, while the year-on-year decreases in clothing were 30.31%, 26.95%, and 10.2% respectively. The improvement of overseas epidemics has reduced the demand for anti-epidemic materials, while the decline in domestic clothing exports has significantly narrowed, indicating that the increase in economic activities in major global markets has increased demand for clothing.
Data from the National Bureau of Statistics show that in July, the total retail sales of textiles and clothing nationwide reached 88.9 billion yuan, a decrease of 2.5% compared with the same period last year; from January to July, the total retail sales of textiles and clothing nationwide exceeded 595.9 billion yuan, down 17.5% year-on-year. Textile and apparel retail sales data in July were relatively bleak, mainly because the domestic textile and apparel market was in the off-season. According to the prosperity monitoring results of the China Textile and Apparel Federation Circulation Branch, the prosperity index of national textile and apparel professional market managers in July was 48.76%, an increase of 0.80 percentage points from 47.96% in June; the prosperity index of professional market merchants was 49.31%, an increase from 6 The monthly increase was 48.82%, an increase of 0.49 percentage points. This means that domestic textile market sentiment has picked up.
Downstream companies continue to destock
According to the survey report on the recovery of orders in various links of the polyester terminal in mid-August, the number of days of raw material inventory of the surveyed companies is concentrated in Those with 10-20 days’ inventory accounted for 33.3%, and those with raw material inventory days of 30-40 days accounted for 1.9%. Judging from the survey results at the end of May, the largest number of companies have raw material inventories of 10-20 days, accounting for 41.2%; companies with raw material inventories of 30-40 days account for as high as 20.6%.
Based on this analysis, most companies have maintained destocking of raw material inventories since the end of May. And since August, as the PTA equipment announced for maintenance in the early stage has been gradually realized, PTA social inventory has declined slightly for two consecutive weeks. At the same time, equipment maintenance has been carried out in September and October, and the loose supply of PTA will be alleviated.
From the perspective of downstream polyester inventory, most of the current finished product inventory in downstream factories is concentrated in 10-30 days. Although it is still at a higher level than in previous years, it is still relatively high compared with more than half of the survey reports at the end of May. The finished product inventory of the companies surveyed has improved significantly when it lasts for more than 30 days.
The cost side supports PTA prices
Since the end of April, crude oil prices have continued to rebound, driving up the cost of PTA, which has rebounded from a low of 2,965 yuan/ton at the end of April to the current level. The price is around 3,500 yuan/ton. As global economic activities gradually resume, crude oil demand will also slowly increase. On the supply side, the OPEC+ production reduction agreement will continue, and the overall implementation rate will not change much. Considering that the new crown pneumonia epidemic in the United States is still not optimistic, the recovery of the U.S. shale oil industry will also be suppressed.
Against this background, it is expected that crude oil prices will generally show a strong oscillation trend in the second half of the year, and the price center of gravity will gradually rise. Stronger oil prices will support PTA prices, which were originally undervalued.
To sum up, with the improvement of the global consumer market and the arrival of the peak consumption season of “Golden Nine and Silver Ten”, terminal textile and apparel demand will improve, thereby stimulating an increase in PTA prices.
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