PTA Bottom Trace Journey Has Not Over
Author: May 05, 2011 17:12
|
PTA price is approaching 10,000 yuan levelstage now, after a survey of the spot goods enterprises, in my opinion, it is the mutual result of macro control policy and micro demand slumping. Since the year 2009, the foundation that support PTA bull market has shaken, PTA bottom trace journey has not yet finished. Its price trend is not optimistic. It is expected that the 10,000 levelstage is probably to be broken through, continue to trace the bottom downward.
Control policies are issued frequently; downstream chemical weaving demand weakens on overall.
In a series of macro control policies, China’s economic growth has slowed down. Economic growth slowed down means the aggregate demand declines. Chemical fiber weaving plants has already felt the colds. March-April is the traditional busy season, but the busy season did not come finally, instead, the whole market is overwhelmed with a bleak scene. Tight monetary policy led the domestic bank credit tighten, which give a financial burden to textile enterprises, whose current capital is in tense. Profit that created last year either turns into stock or turns into machinery to expand production capacity. Actual demand declined, lower than expected. The situation of oversupply made the price downward continually. High stock pressure accumulated day by day, chemical fiber plants, cotton yarn plants run the quantity at low prices to get the current capital, yet its sales volume is not that good. Cotton yarn price in different regions marked down since March, which is averagely reduced 5000CNY/t till now. For the cotton price has played a more and more important influence factor to the PTA price trend, so cotton price weakens drags PTA price down, which is also changing PTA demand situation.
In 2010, a bull market occurred in material market that was rare in a decade. For cotton demand is under supplied, its price broke the levestage of 30,000CNY, which boost the replace demand for poly staple fiber and also brought PTA demand increase dramatically. Last year, textile material increase greatly, textile fixed assets investment increase is the main reason to boost material demand, in addition with the increase of customer demand. Over production existed originally, and after two-year’s liberal policy, over production further increased, and the oversupply pressure has revealed after the spring festival. It was found that cotton yarn plants have more stock than poly yarn plants. Depressed cotton yarn sale has a direct influence on poly staple fiber industry. Operation rate in poly staple fiber plants has decreased from 90% at the beginning of the year to 73% now. Stock is maintained of a 10-day volume. While poly filament fiber stock is maintained at 2-3 weeks and bigger plants have more stocks. Currently, holidays increased in small cotton yarn spinning plants, and production restrict is taken out in middle and big enterprises. Elasticize plants of weak financial strength are mostly shut down. Using of new products cutbacks the production of some poly plants. Poly industry (poly chips, filaments and staples) overall operation rate fall from the peak 84% to 82%.
Most textile apparel products of China are absorbed by exportation. Under the unfavorable factors like RMB appreciation, raw material price fluctuate sharply, labor cost increase and etc, the low and middle grade products orders have been shifted to Vietnam, India and some other developing countries. Textile and garment enterprises are dare not to do big orders, thus its material procurement becomes prudent. Elasticize plants and weaving plants are generally bought in according to their needs, which aggravated the inventory pressure of cotton yarn plants and chemical fiber plants. In order to retain workers, raw material plants had to do passive production under the situation of slack market and high stock pressure.
After CPI mounts high in March, officials in Bank of China tend to liberate exchange rate policy to fight against the inflation. To accelerate RMB appreciation may be the most likely policy choice. But accelerate RMB appreciation will play a very negative role in China’s textile products exportation. Profit will be declined for the exchange rate raise. See from the feedbacks of the 109th Canton fair, textile trade situation is not optimistic this year. Request for price raise is rejected by most foreign buyers. In order to boost enterprise transition, the government may lower textile tax drawback. If the policy carried out, textile export will suffer a heavy burden.
Profit are mostly centered on upstream industry chain, PTA supply tends to liberal
After September, 2010, PTA prices both spot and futures increase sharp. The profit distribution is reasonable except PX industry has low profit. Not until November, it is always when downstream products raise price boost PTA price up. Since December, 2010, with the rapid increase of PX price, PTA industry chain profit soon turns forward to PX-PTA chain. Profit in poly industry declined sharply. March, poly staple fiber and filament are always at loss or have slight profit. Profit shrink and high stock make poly plants situation awkward. Production activeness frustrated, operation rate is lowered down coincide of all plants, which directly lowered PTA demand. After reducing production, some plants can not absorb the uneaten PTA contracts have to shift these products to spot goods market. PTA gross profit increased greatly in the first season of the year, by the advantage of industry pricing and contract sale. Even under the situation of sharp price reduce, the profit margin can also maintained at the same level by slowly lower down its contract price, which wins a bigger part of the whole profit. Many PTA plants stops to check and repair in April, the overall operation rate is maintained at 92%, the peak than ever. PTA plants farewell the zero stock situation. PTA plats run goods in large quantity through spot goods market in April. Above all indicated that under the high profit incitement, PTA plants have an active production mood, the actual check and repair time is shorter than expected, PTA aggregate supply did not reduce greatly. With PTA price went down day by day, the adelomorphic social pressure appears out, but spot goods market still lacks second hand buyers, foreign PTA high price disappeared and PTA supply tend to be liberal.
Downstream operation rate will be further lowered for the summer load shedding in Jiangsu and Zhejiang areas.
Power situation will be more severe this year in eastern China area. It is likely to face the most serious power shortage since the year 2004. According to the forecast, during the summer of 2011, the highest load demand is about 0.19 billion KW, which increased 14.9% compared with the same period of the year. And during the load peak period, the power shortage may reach 11660 thousand KW, obvious contradiction of supply and need. The national electric network Jiangsu company forecasted at the beginning of the year, the biggest power shortage will be 10700 thousand KW this summer, Zhejiang power shortage will be over 3500 thousand KW. Many regions in Zhejiang Provinces have rationed the power supply since March this year. Some textile plants have taken electric rationing method like “one day rest every three work day” “two days rest every five work days”. Under the high stock pressure, chemical textile enterprises lowered down its operation rate in March and April, load shedding may result in congregate check and repair work, thus the whole downstream operation rate may be even lower, PTA supply pressure may be even standout. Thus accelerate futures pricing pressure.
|
Editor: Candy From: 168Tex.com
Most Read