Market Dynamics: How To Break The Situation Of Polyester Filament In "Peak Season Is Not Prosperous"

In the third quarter of 2022, the performance of polyester filament industry is not prosperous in peak season, and the performance of leading enterprises generally declines.

Among them, Tongkun shares (601233. SH) in the third quarter of the year-on-year decline of 14.01%, net profit fell 118.09%. In addition, Dongfang Shenghong (000301. SZ) achieved an operating income of 16.465 billion yuan, a year-on-year increase of 17.14%, and a net profit loss of 58.7978 million yuan, a year-on-year decrease of 105.78%; The operating revenue of Hengli Petrochemical (600346. SH) increased by 9.14% year-on-year, and its net profit decreased by 147.66%.

Tongkun said at the performance presentation meeting that the drastic changes in international oil prices, repeated outbreaks of new crown pneumonia, and sluggish external demand caused by the Federal Reserve's interest rate hike channel led to a "sluggish peak season" in filament demand in the third quarter, and the production and operation of enterprises are facing great challenges.

"The demand for polyester filament is not good, and the tide of industry production reduction may come." Zhu Yaqiong, an analyst with Longzhong information, said in an interview with China Business Daily that since the end of October, the downstream weaving and printing and dyeing operation rates of polyester filament industry have shown a downward trend. At the beginning of October, the start-up of chemical fiber weaving in Jiangsu and Zhejiang Province dropped to below 60%; In mid November, the overall startup rate further dropped to around 55%. Due to the energy crisis in Europe, Christmas orders have been greatly reduced. With the gradual depletion of winter orders, the polyester industry chain including polyester filament will enter the holiday mode ahead of time. Some polyester filament manufacturers have successively reduced the burden. The industry's start-up rate dropped from 73.42% at the end of October to 64.39% on November 10, with a decrease rate of 9.03%.

An executive of a polyester filament listed company also told reporters that at this stage, polyester filament continued the weak trend of demand in the third quarter, and the superimposed inventory continued to increase. From the perspective of time line, the production reduction of the whole industry is imminent.

　　 Market downturn

It is also called "polyester fiber" in the downstream of petrochemical industry. According to different uses, polyester filament can be divided into civil polyester filament and industrial polyester filament. The civil polyester filament is mainly used in the fields of clothing, home textile and industrial use. As far as the output is concerned, the civil polyester filament is far higher than the industrial polyester filament. POY, FDY and DTY are the main varieties of civil PET filament.

Since this year, polyester filament industry operation has obvious pressure. Enterprises are facing the test of high cost, low demand, high inventory and low benefit.

A few days ago, a number of polyester filament listed companies published three quarterly reports, enterprises generally "increase revenue but not increase profits.".

According to the third quarter report of 2022 released by Tongkun Co., Ltd., the company realized 17.337 billion yuan of operating revenue in the third quarter of 2022, a year-on-year decrease of 14.01%; The net profit attributable to the shareholders of the listed company is - 366 million yuan. In the first three quarters, the actual operating revenue was 47.189 billion yuan, a year-on-year decrease of 6.27%; The net profit attributable to shareholders of listed companies was 1.935 billion yuan, down 68.59% year on year. In addition, Dongfang Shenghong achieved revenue of 16.466 billion yuan in the third quarter, with a year-on-year increase of 17.14%; The net profit loss attributable to the parent company was 58.7978 million yuan; In the first three quarters, Dongfang Shenghong achieved revenue of 46.708 billion yuan, with a year-on-year increase of 16.17%; The net profit attributable to the parent company was 1.577 billion yuan, down 59.99% year on year.

According to the Research Report of Changjiang Securities, since the third quarter, the traditional "gold, silver and ten" of textile and garment industry has shown a trend of "not prosperous in peak season". The continuous weakening of demand leads to the increase of inventory, the decrease of price and the loss of the industry. In the third quarter, the average price excluding tax of POY, FDY and DTY of Tongkun shares was about 7119 yuan / ton, 7789 yuan / ton and 8501 yuan / ton, respectively, which decreased by 322 yuan / ton, 258 yuan / ton and 524 yuan / ton on a month on month basis. Although the prices of PTA, PX and MEG of raw materials also fell, the overall profits of silk sector continued to deteriorate.

Longzhong information data shows that as of October 24, as of October 24, poy150d / 48F reported 7550 yuan / ton, fdy150d / 96F reported 8225 yuan / ton, dty150d / 48F reported 8925 yuan / ton, POY profit was - 161.02 yuan / ton, FDY profit was 13.98 yuan / ton, DTY profit was 175.0 yuan / ton.

CICC securities research report pointed out that the third quarter is the traditional peak season of polyester filament, and the industry's production and sales rate has increased month on month, but the downstream demand is still lower than that in previous years, which is relatively low. At the end of the third quarter, filament stocks were still at a historical high.

At the same time, due to a long period of light production and sales, polyester filament enterprises have further accumulated finished product inventory. According to Longzhong information statistics, as of October 20, FDY inventory of polyester filament was 31.1 days, up 2.3% month on month; POY inventory of polyester filament was 31.3 days, up 5.03% month on month; Polyester filament DTY inventory was 38.7 days, up 2.93% month on month.

　　 Production reduction and price protection

Due to the price decline of polyester filament products and weak demand, some enterprises choose to reduce production and maintain price.

The reporter learned from a number of listed companies that most of the companies with large capacity have plans to reduce production.

"In fact, at this stage, the start-up rate of polyester filament is at the historical low level in recent years. At present, the operation rate of the industry is at a low level, basically close to the lowest point in the year." Zhu Yaqiong said that in recent years, due to the continuous expansion of polyester filament production capacity, the supply pressure of polyester filament is not reduced.

Zhu Yaqiong analyzed that, according to the Convention of previous years, after experiencing the "golden nine silver ten" demand peak season, the average inventory of polyester filament industry dropped to 15-20 days, which was at a relatively safe level, but this year's inventory continued to be at a high level. At the same time, downstream grey fabric finished product inventory is also high. Since the end of October, polyester filament downstream weaving, printing and dyeing machine rate has shown a downward trend. At the beginning of October, the start-up rate of chemical fiber weaving in Jiangsu and Zhejiang Province has dropped to below 60%. In mid November, the overall start-up rate further dropped to around 55%. Due to the energy crisis in Europe, Christmas orders have been greatly reduced. With the gradual depletion of winter orders, the polyester industry chain including polyester filament will enter the holiday mode ahead of time.

In Zhu Yaqiong's view, polyester filament cost side support is insufficient, also facing the situation of intensified supply contradiction caused by shrinking demand. Therefore, the "stable price" of polyester filament is difficult to last, and the market is bound to fall for a long time. It is estimated that in the middle and late November, with the gradual decline of the operating rate of downstream weaving enterprises, polyester filament will gradually open the mode of shady decline. With the increasing inventory pressure, the decline trend will gradually turn from dark to bright.

　　 Speed up shuffling

Although the industry is in a low ebb, the capacity layout strategy of leading enterprises is still in an orderly manner.

The reporter noted that at present, the polyester filament industry is in the stage of continuous integration.

In 2015, the production capacity of Hengli and Changyi Petrochemical Co., Ltd. will gradually increase from 54.6% to 29.6% of the total production capacity of Hengli and Changsheng Petrochemical Co., Ltd., which will gradually increase from 5 leading enterprises in the polyester fiber industry. The leading listed enterprises in polyester filament industry have obvious advantages in production scale, and have strong competitiveness in terms of process maturity, product stability and production cost control.

Among them, the projects under construction include Nantong Jiatong Petrochemical 2.4 million tons of polyester filament + 5 million tons of PTA project, Tongkun (Shuyang) 2.4 million tons of filament (staple fiber) project, Anhui Youshun 1.2 million tons of filament project. In addition, xinfengming is expected to add about 300000 tons of polyester filament capacity and 600000 tons of polyester staple fiber capacity by the end of 2022. By then, xinfengming will have a production capacity of 6.6 million tons of polyester filament and 1.2 million tons of polyester staple fiber. At the beginning of 2022, Hengli Petrochemical added the project of 1.6 million tons of high-performance resin and new materials and 2.6 million tons of high-performance polyester with a total investment of 24 billion yuan.

Many institutions said that the industry trough or will accelerate shuffle, the pattern is expected to continue to optimize. The new production capacity of leading enterprises is steadily released, and the chemical fiber leader is expected to reverse at the bottom.

The reporter noted that Hengli petrochemical, Tongkun Co., Ltd. and xinfengming have been continuously expanding their integrated layout to the upstream. Among them, xinfengming has planned another 4 million tons of PTA capacity on the basis of Dushan energy's 5 million tons PTA capacity.

Hengli Petrochemical personnel told reporters that it has formed a "big chemical" platform supporting the integration of "oil, coal and chemical" in the upstream tour, and the industrial development foundation and pattern mainly based on the R & D and accumulation of new materials with "silk, membrane and plastic" in the downstream, and has continued to dig deep into the dynamic moat built by technology, management, cost, efficiency and innovation.

Hengli Petrochemical believes that in the face of complex external environment, the integrated upstream and downstream operation and product portfolio supply mode of high added value and multi varieties of industrial chain has better defense in the downward period of oil price, and has stronger profitability elasticity in the stage of oil price rising and demand recovery, which also stabilizes and improves the profitability center of the enterprise to the greatest extent.

Tongkun shares also said that in terms of PTA, its subsidiary Jiaxing Petrochemical has a capacity of 4.2 million tons. From the second half of 2022 to the first half of 2023, Nantong production base plans to complete two sets of 2.5 million tons PTA projects, which will have nearly 10 million tons of PTA production capacity by then, and can basically realize the PTA raw material self-sufficiency.

In this regard, Changjiang Securities research report pointed out that at present, the polyester filament industry is going through a trough, the industry is in a downturn cycle, and the inferior capacity of cost control may be accelerated to exit, the industry concentration is expected to further improve, and the leading voice is expected to continue to increase.

(source: Chen Jiayun, reporter of China business daily)