Polyester: Cost pressure drops Polyester cash flow repair

Since April, the cash flow of China's polyester products has been in a stage of upward recovery. Among them, the production of polyester chips and polyester staple fiber has turned losses into profits. The profit of polyester chips has increased from around-201 yuan/ton at the end of March to 266 yuan/ton so far. The production profit of staple fiber has increased from around-376 yuan/ton at the end of March to 136 yuan/ton so far. The production loss of polyester has also gradually decreased. Its cash flow has dropped from a loss of around 370-380 yuan/ton at the end of March to around 70-140 yuan/ton at present. The cash flow of polyester bottle chips has been hovering at a low level around 100-200 yuan/ton.

Table 1. Comparative table of market ups and downs in China's polyester industry chain

Unit: yuan/ton

Since the beginning of April, the main PTA contract closed down from 6398 yuan to 5208 yuan, down 1190 yuan, or 22.85%. The spot market closed down from a high of 6540 yuan/ton to 5520 yuan/ton, down 1020 yuan/ton, a drop of 18.48%. The main reason for the decline in China's PTA market was falling costs and weakening the supply and demand side of the market. The international crude oil market fluctuated and weakened. The upstream PX Asian market fell from US$1125/ton to US$963/ton CFR China. The decline in cost side dragged down the market. The supply side of China's PTA market has increased, and its own inventories continue to accumulate, while downstream polyester demand has weakened. The weak supply and demand side has dragged down the PTA spot market to continue to decline. However, due to a decrease in supply and port inventory, another polyester raw material, ethylene glycol, the market spot price remained strong. The pressure on polyester raw material costs has gradually eased, with costs falling by around 12%, while the overall decline in the polyester market has remained around 6-9%, which is much smaller than the decline in the raw material market. Therefore, polyester profits have gradually improved. Only the polyester bottle sheet market fell slightly more than the cost decline, and its profits shrank slightly.

However, as far as the current polyester market is concerned, as the weather gets hotter, the supply and demand side of polyester itself weakens, and the terminal textile market has begun to enter the traditional off-season. The downstream starting load of weaving and texturing in China will gradually decrease, and the demand for the market will decrease., the enthusiasm for raw material procurement has weakened. Even if polyester factories reduce prices and promote sales, their overall production and sales have not appeared to be booming. Only individual manufacturers 'production and sales can exceed 200-300%. Therefore, weak demand will continue to drag down the market trend.

For the future outlook, China's polyester raw material market is still weak, and cost support is insufficient for the market. Although the polyester start-up load has rebounded slightly recently, as demand enters the off-season, there is limited room for continued improvement in the later period, and the market supply and demand side has weakened. Therefore, the polyester market is still facing greater pressure in the later period. Continue to pay close attention to the raw material market and market supply and demand trends.