Views:1 Author:Site Editor Publish Time: 2018-12-06 Origin:Site
Impacted by the bullish news that China and US will stop further implementing additional tariff from Jan 1, 2019, crude oil price and polyester cost ascended on Monday, and sales of PFY were hot, with daily ratio at around 400% by P.M. 3:00. Stocks of PFY greatly declined by around 4-5 days.
On Tuesday and Wednesday, with the fermentation of this bullish news, crude oil price rebounded and feedstock market continued rising.
Under such circumstance, sales of polyester products kept improving and price climbed up.
Overall market was during rallying stage stimulated by increasing feedstock and sound sales of polyester products, and the continuity should be highly noted during this period.
Based on current market situation, 2 points should be concerned in the future:
1. Feedstock market should pay attention to the crude oil production cut of OPEC and the decrement.
The output cut of OPEC and some non-OPEC nations plays a crucial role in volatile crude oil price since 2014. Supply/demand pattern of crude oil has seemed to change since Sep 2018 when inventory kept mounting in US and production activity enhanced with rising price. If OPEC reduces production, the market share is expected to lose although it is bullish for crude oil price. From this angle, the possibility of production cut in a large scale should be suspected.
2. The focus of demand side is the recovery of run rate in weaving plants and twisting units.
Demand for PSF and PET bottle chip has relatively stronger support. PET bottle chip market is backboned by export and seasonal demand, and stocks of PSF have rapidly declined to low level supported by sound run rate of polyester yarn plants.
Stocks of PFY have dropped apparently in many plants driven by sound sales in recent 3 days. According to incomplete statistics, inventory of PFY dipped by around 4-8 days during recent 3 days, even higher in some plants. With rising price, weaving plants witness increasing orders, and some plants delay suspending production, but operating rate does not rise apparently. Thus, stocks of PFY are only transferred to downstream market from upstream market, not really being digested. Feedstock inventory of downstream end-users is mainly around 7-15 days, and some higher to guarantee the production till end-Dec. Once procurement of downstream buyers stagnates, inventory of PFY is expected to accumulate again. Actually, some PFY plants still see high stocks at hand with big base number, and the burden has been mitigated, but not disappearing. Downstream demand may be hard to improve much with the approaching of Lunar New Year. Under current grey fabric price, rebounding room for feedstock market is not big. Overall demand will be dampened.
Thus, downstream buyers need to replenish feedstock to ease cost pressure under rebounding market and production requirement. It is too early to say the massive restocking before the Lunar New Year, and eyes are suggested to the latest news about crude oil production curtailment.