PTA Is Dragging Its Feet Again. Grey Cloth Inventory Is Piling Up. Is There Any Hope For The Traditional "Kim Gu" Season?

After entering the so-called "Kim Gu", the end of spinning and weaving of polyester terminals did not go further as expected. From the recent inventory data tracking, we can find that the inventory of the white goods in the weaving mill is not dropping, but the shipping atmosphere is weaker than that of the order and the main cargo in August. However, the performance of raw materials is two grade differentiation, while ethylene glycol, which has been declining for a long time, has rebounded, but PTA is powerless and weighs down the market mentality.

In July 2019, PTA output was 3 million 790 thousand tons, an increase of 8.26% over the same period last year. The output of ~7 PTA in January 2019 was 25 million 650 thousand tons, an increase of 8.79% over the same period last year. PTA social inventory has been constantly accumulating.

At present, 1 million new tons of PTA in Sichuan have been put into operation in May 22nd and are now running at full capacity. Follow up 2 million 200 thousand tons of new Feng Ming and 1 million 200 thousand tons of Zhongtai Kun Yu are expected to be put into operation in September and December respectively. As new devices are put into production and load increases, PTA supply is expected to increase gradually, and PTA will gradually enter the stage of oversupply.

Since August, the difference of PTA processing has fluctuated between 800~1000 yuan and ton. Although the level of the previous 2000 yuan / ton has dropped a lot, but considering that the subsequent PTA will face oversupply, the current production profit level is still acceptable. Following the launch of new capacity, PTA production profits will be further compressed in anticipation of oversupply. Based on the expectation of excess supply of PTA in the future, the current PTA production profit is still acceptable. Therefore, the current PTA manufacturers' willingness to overhaul is not strong.

From the perspective of domestic demand, the growth rate of textile and garment demand has dropped again. In January 2019 ~7, the total retail sales of social consumer goods amounted to 228283 billion yuan, an increase of 8.3% over the same period last year, lower than the 9.3% growth rate of the same period last year. Among them, the total retail sales of consumer goods in July amounted to 33073 billion yuan, an increase of 5.7% over the nominal period, and the growth rate dropped again. In terms of the textile industry, the total retail sales of clothing, shoes, hats, needles and textiles were 749 billion 870 million yuan in January 2019 ~7, representing an increase of 3% over the same period last year, unchanged from the increase in January ~6.

From the perspective of external demand, exports are improving near the peak season of consumption. In January 2019 ~7, China's total import and export volume was 17 trillion and 410 billion yuan, an increase of 4.2% over the same period last year. Among them, the total export volume was 9 trillion and 480 billion yuan, an increase of 6.7% over the same period. But for the textile and garment industry, the export situation is not optimistic. In January 2019 ~7, the national textile and apparel exports totaled 151 billion 739 million US dollars, down 1.7% from the same period last year. Of them, the total export of textiles was US $69 billion 384 million, an increase of 1.5% over the same period last year, and the total export of clothing was US $82 billion 356 million, down 3.9% from the same period last year. At present, textile exports have improved, but the weakening of clothing exports has a negative impact on terminal external demand.

On the one hand, the upstream PTA link is constrained by the pressure of production capacity, and the price center of gravity keeps falling down, which gives a larger price reduction space for polyester. On the other hand, the local orders at the end of August have rebounded. Although demand is weaker than in previous years, production and sales have rebounded under the promotion of polyester prices. At present, polyester stocks are at a low level, POY is relatively good, and the relative pressure of FDY is relatively large. Of course, we still need to be vigilant against the risk that the terminal demand will not be substantially followed up.

Thanks to the profitability of the PTA link, polyester profits are better repaired. As of September 11th, the slice profit was 316 yuan / ton, POY profit was 616 yuan / ton, DTY profit was 641 yuan / ton, FDY profit was 131 yuan / ton.

Under the slow recovery of terminal demand, but still not strong enough, polyester link profit has been repaired well, but there is a lack of price support and pull. "Golden nine silver ten" peak season is expected to raise the price of polyester limited. With the advent of the traditional peak season for polyester consumption, polyester prices have dropped to a historical low point. When the marginal demand has improved, polyester prices are expected to stabilize gradually, and the strength of terminal demand will determine the height of pet price rebound. Constrained by the current global sluggish macroeconomic environment, demand for polyester will be weaker this year, despite the seasonal improvement in demand in 9-10.

At present, there is strong support at the bottom of PTA. Before the new capacity is put into operation, it is expected that PTA will not be able to break through in the short term. But considering that the terminal demand will be weaker than in previous years, it is expected that the PTA rebound will be limited. From the demand side, the "golden nine silver ten" will bring the seasonal seasonal demand to a better turn, but the macro-economic environment will determine demand lower than last year. At present, the partial order of the terminal has improved, but due to the poor economic environment, the demand for textile service is relatively low, and the demand for terminal orders is still not strong enough.