Polyester: Cold air boosts the resilience of domestic demand

Recently, as the weather in southern China has turned cold, the winter clothing business has entered the "peak season mode" ahead of schedule. The sales volume of winter clothing in major clothing wholesale markets has increased significantly, which forms a sharp contrast with the sluggish performance of autumn clothing.

The arrival of cold air has extended the peak season in the textile industry in October, which was better than the previous market expectations. At present, the knitting market remained quite strong, with the business of fleece products continuing to perform well. Only the business of water-jet home textile in the Changxing area still showed weak improvement recently.

Overall, the resilience of this round of domestic sales peak season has been relatively strong. The downstream order index monitored by CCFGroup has returned to the average level of previous years, and the grey fabric inventory has continued to be in the destocking channel. Although it is still higher than the level of the same period in previous years, given the current momentum of the peak season, there is still hope that the comprehensive grey fabric inventory will be destocked to a relatively normal level in the later stage.

At the same time, with the continuous decline in the prices of oil prices and polyester raw materials (PTA and EG) recently, the processing spread of polyester and downstream DTY plants and fabric mills have improved significantly. For polyester, except that FDY fine denier yarn still has a certain loss, the processing spread of other products, including polyester POY, PET fiber chip, PET bottle chip and PSF, was relatively considerable. Based on the current good profits of polyester and controllable inventory, the forecast for polyester polymerization rate is revised up: the average monthly operating rate in October will be maintained at 91.5%, revised up to 90.5% in November and 89.5% in December. It may be revised up again in the later stage according to the continuous situation of demand.

In addition, the processing spread of DTY has recovered from losses to around the break-even line or even a small profit. For the profit of fabric sector, except for the losses in water-jet weaving, most knitting products have turned losses into profits, and a few have begun to make profits. Especially, the profits of warp knitting fabrics were relatively good in Haining. This week, the downstream market entered centralized purchasing cycle. The sales ratio of PFY in Jiangsu and Zhejiang increased significantly on Oct 21, with the average sales ratio at around 450%. However, it is expected that the downstream players will still mainly focus on short-cycle replenishment based on rigid demand for the time being. The replenishment may last until the end of the month, and it is necessary to pay attention to the Sino-US negotiation situation at the end of the month before making the next decision.

Overall, impacted by the gradual decline in upstream raw material prices and the timely arrival of cold air, the polyester sector and its downstream industries enjoy the rare market dividends brought by the traditional peak season recently.