Rising market is temporarily suspended, staple fiber more face "intermission"

01-21 2021

 

Since November, staple fiber out of a wave of smooth upward market, the main contract rose up to 18%. At this time, we believe that the long market is facing a phase adjustment, but the short fiber long bull pattern has not changed.




Crude oil-driven oil-based chemicals rose




Previously, we believe that the rise in crude oil prices and terminal replenishment warming will be the two core factors driving the rise in staple fiber prices. At present, the current round of staple fiber rose more benefit from the lift in oil prices.








In the global demand orderly recovery and OPEC's production cuts under the care of the international oil prices since November last year continued to rise, the cost of downstream oil-based chemicals pushed up. The rise in crude oil ignited downstream replenishment sentiment, polyester production and sales in the past 1-2 months performance is more hot, downstream enterprises speculative stocking sentiment is high.




Short-term overdraft, prices face adjustment




Crude oil, the latest EIA data show that U.S. commercial crude oil inventories fell 3.248 million barrels, Saudi Arabia will voluntarily cut production by an additional 1 million barrels per day in February-March, but according to information agencies PetroLogistics statistics, OPEC member countries in December last year, the implementation rate of production cuts slipped to 82%, down 10% from November. The implementation rate of non-OPEC production cuts represented by Russia slipped 8% to 64% in December, OPEC+ production cuts have shown signs of loosening, and with the oil price pivot up, the demand for increased production from production-cutting members will become stronger. After the gradual realization of the good crude oil, further upside drive becomes weaker, but in the context of abundant liquidity, crude oil is difficult to have a deep retracement, short-term


In the short term or tend to oscillate at a high level.




Weaving, by the downstream of Jiangsu and Zhejiang start by the impact of workers return home, the load fell. At present, the weaving start fell to 83%; loom start fell to 63%, next week or down to 40%; dyeing plant start fell to 66%, dyeing plant start fell in the area of inventory began to pile up, has not begun to fall in the area of the end of January and early February parking plans.




Polyester, the first wave of concentrated production cuts before the Spring Festival began, Hengyi, Yi Jin, Kai's, Xianglu, Tenglong, Tian Sheng, Jiabao, Shihua, Sanfangxiang (600370, stock bar) for production cuts. As of last Friday, polyester load at 88.7%, including staple fiber load at 85.6%, weakening 7% from the ring.








Overall, the crude oil end of the positive out, the price is likely to oscillate and adjust. From the point of view of staple fiber itself, the rapid upward price, downstream replenishment of short-term overdraft, coupled with the Spring Festival factors lead to seasonal weakening of the downstream start, short-term demand shows a weakening trend. Therefore, staple fiber prices also have a phase adjustment pressure.




Textile industry finished goods inventory is still at a low level




From the current inventory of each link in the industry chain, the current round of polyester products are more reflected in the yarn enterprises, rather than the bottom-up replenishment brought about by the terminal rebound. Another core factor driving staple fiber prices, that is, the textile and apparel industry's initiative to replenish stocks has not yet materialized.








At present, the global industries have been recovering, industrial enterprises profit level rebound, most of the terminal industry signs of recovery, one after another into the active replenishment cycle. The textile industry, due to the impact of the epidemic, belongs to the industry that has not yet recovered. From the perspective of industrial inventory cycle, the industry is currently in the passive de-stocking stage and will soon enter the active replenishment cycle. The profit level of enterprises provides conditions for replenishment, while the peak season of stocking after the popularization of vaccines in spring will provide the driving force for the replenishment cycle. Once the terminal really starts to pick up, the elasticity of staple fiber price increase will increase based on the bull's tail effect brought by downstream demand recovery and channel inventory replenishment.




Comprehensive analysis of the above, we believe that the core factors driving this round of price increases in staple fiber is crude oil, in the short term, crude oil out of the positive, the Spring Festival demand is weak, staple fiber prices have a phase adjustment pressure. But the staple fiber terminal textile and apparel active replenishment has not really opened, therefore, the staple fiber long bull pattern is still expected.


 

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