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In the past year, the chemical fiber industry has entered a cycle of excess capacity, and processing profits have generally suffered losses, but the viscose industry chain with strong cost support has declined compared with the price performance of the polyester industry chain. The cotton planting area is in a contraction cycle, the supply is in short supply, and the price of the industrial chain is rising. With the deepening of the off-season, textile demand will fall seasonally, and the prices of main textile raw materials will fall in June and July, and the processing profits of enterprises will be compressed.
Prices of textile raw materials vary
With the continuous expansion of refining and chemical integration capacity, since 2022, the supply growth rate of polyester staple fiber industry chain has exceeded the growth rate of demand, superimposed crude oil prices have fallen, the cost center of gravity has moved down, the price resonance of the industry chain has fallen, the processing profits of enterprises have continued to lose, and the market has entered a state of excess capacity. Through the analysis of the data of the past five years, it was found that since 2021, the gap between supply and demand of polyester staple fiber has continued to expand, of which the increase in 2022 is even as high as 84.62%. The gap between supply and demand continues to expand, and the price of polyester staple fiber fluctuates downward, driving the price of the industrial chain to resonance.
This year, with the slow improvement of domestic demand, the weak balance between supply and demand of viscose staple fiber, and the overall stability of the industrial chain price. From the perspective of the cotton industry chain, this year, with the improvement of the downstream demand margin, the loose pattern of cotton supply and demand gradually improved, driving the price shock rebound. According to the national cotton supply and demand balance table data released by Zhuo Chuang Information in May, the ending inventory of 2022/23 is estimated to be 9.322 million tons, and the inventory consumption ratio decreased slightly by 0.1 to 1.22. The monthly average price of cotton is highly negatively correlated with the ratio of storage and consumption, and the speed of cotton destocking is accelerated, supporting the bottom rebound of spot prices, and driving the price resonance of the industrial chain. Zhuochuang information monitoring data show that as of May 30, the average price of 3128 grade cotton market in China 15,999 yuan/ton, up 8.79% from the beginning of the year; The average price of C32S in Shandong is 24,250 yuan/ton, up 6.3% from the beginning of the year.
Chemical fiber yarn and pure cotton yarn profit differentiation
In the past year, the theoretical profit of chemical fiber yarn has been in a state of loss for most of the time, the fundamental reason is the lack of raw materials and demand support under the pattern of overcapacity; The profit performance of pure cotton yarn is reasonable, mainly due to the good cost support and demand margin. As of May 26, the processing loss of 32 pure polyester yarn was 400 yuan/ton, which was 631.1 yuan/ton lower than the average in the past five years; The processing loss of 30 spun rayon yarn is 391.5 yuan/ton, 565.31 yuan/ton lower than the average in the past five years; The profit of 32 pure cotton yarn processing is 796.92 yuan/ton, 697.3 yuan/ton higher than the average in the past five years.
The price of main textile raw materials will fall in June and July
From the historical law, off-season polyester staple fiber and cotton price differentiation probability is large. Recent ten years of data show that in June and July, cotton prices fell more years than rising years, and polyester staple fiber rose more years.
From a fundamental point of view, with the deepening of the demand off-season, it is expected that the demand for textiles will weaken seasonally in June and July. As the yarn link enters the inventory cycle, the price of main textile raw materials will fall, and the processing profits of enterprises will be compressed.
In terms of raw materials, the supply side of chemical fiber is loose, which is negative for the price of short fiber; Cotton supply is expected to tighten after the end of the trade, static supply easing, seasonal demand will drive the market, cotton prices have high downward pressure. Off-season textile raw materials industry chain cost center of gravity or resonance lower.
On the demand side, the expectation of recovery of domestic consumption still exists, but the foreign trade market is not performing well, and the terminal demand is weak and strong, and the support for the cotton yarn market will gradually weaken. Domestically, with the advent of the traditional off-season of high temperature and high humidity, new orders for downstream conventional gauze will gradually decrease, there is pressure on gauze storage, or affect the pace of cotton yarn procurement in cloth factories, downstream demand is expected to weaken, which is negative for textile raw materials and the prices of various industrial chains.
In terms of profits, the chemical fiber industry chain will be plagued by overcapacity, and processing profits will be difficult to turn losses into profits; Pure cotton series profits will also be compressed, but under the support of production cuts and ginned enterprises are expected to recover, the decline in cotton prices in the off-season will be limited, and the decline in cotton yarn prices will also be supported, and it is expected that the processing profits of cotton spinning enterprises will be compressed to near the break-even point.
To sum up, China and the United States economic cycle dislocation, foreign trade demand continued weak trend, domestic trade demand weak recovery after the off-season, domestic and foreign markets double cycle operation is not smooth, superposition costs decline, is expected to June to July chemical fiber and cotton industry chain price resonance downward pressure increase, of which polyester staple fiber industry chain inventory is high, the decline or will lead.
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