Initial signs of raw materials at the end of the stage shows whether the bottom of the polyester market can be established

December 31 12:09:00, 2022

Last week, international oil prices oscillated above the threshold of US$120 per barrel. On Friday, NYMEX crude oil futures closed at US$125.10 per barrel on September, compared with the historic high of US$147.27 per barrel touched on July 11th. NYMEX crude oil Futures prices have fallen by more than $22. Market participants said that the recent crude oil prices continued to weaken, mainly due to investors' lack of confidence in the outlook for the economy, and expectations for demand have been lowered. The impact of declining demand has been reflected in the US demand for gasoline. Although summer is the peak season for gasoline consumption, the demand for gasoline has continued to decline. According to a survey conducted by relevant agencies, the retail gasoline demand in the United States last week reached the highest level since the beginning of this year, but it still fell 4% year-on-year. Depressed demand has forced some US refineries to reduce gasoline production. Due to the reduction of domestic demand, the US gasoline exports in recent months have reached a new high since 1945. The declining demand has brought about certain psychological impact on investors, resulting in a pessimistic market environment and obvious capital outflows. To this end, some analysts pointed out that the technical adjustment of the crude oil market is not in place, the price has not yet stabilized, and it is expected to fluctuate around the $120 position. In addition, the trend of the US dollar index is also a key factor affecting oil prices in the near future. Under its effect, the price of oil does not rule out the possibility of further declines. However, some analysts believe that despite the decline in demand, its role in the market is mainly psychological. The long-term trend of rising oil prices has not been destroyed. The end of the uptrend does not mean that the bubble burst. The recent correction of the weak dollar policy and the sharp fall in crude oil prices are inextricably linked to political factors such as the end of the US election and the rapid economic recovery. The US dollar and commodity trading have always been the two extremes on the seesaw. The real burst of the international oil bubble should be after the dollar has entered the interest rate hike cycle.
In the first half of the week, the kinetic energy for short-sales in the Asian spot PX market continued to be released. The cumulative fall from Monday to Wednesday was as high as US$100/ton, which directly tested the downward support at the integer mark of US$1400/tonne CFR. After that, boosted by the strong rebound in international crude oil prices and the increase in export tax rebate rate for textiles and apparel, spot PX stopped falling. However, the current balance of supply and demand makes the PX market still under great pressure. Before starting this round of diving, Asian PX producers enjoyed a pleasant level of profit. As a result, Asian PX plants maintained a high operating rate, and PTA producers’ losses were obvious to all in July. For this reason, they once again decided to cut down production. Confidence, to carry out limited production and price-insurance self-help actions, this is a blow to the demand for PX is deep, especially the impact on spot spot demand is heavy. After late August, if the deep-sea arbitrage cargoes shipped to China are shipped to Asia, the pressure on the supply side will further increase. For PTA producers, firm deepening of production cuts is their current policy approach. On the one hand, we can actively combat the decline in demand by controlling supply increase, improve supply and demand balance as quickly as possible, and on the other hand can effectively combat raw material PX and try to reduce costs. The platform strives for more living space for itself. If the PTA producer can successfully suppress the August ACP, and at the same time, it can achieve the suppression of price decline through production restriction, then the PTA producer's August earnings level is expected to improve. The MEG market, another polyester raw material, also picked up on the weekend. From the point of view of profit, MEG producers have also lost money. They are also eager to see prices rise to improve their profitability.
On July 31, the Ministry of Finance and the State Administration of Taxation issued a notice and approved by the State Council to adjust the export tax rebate rate for some commodities. The export tax rebate rate for some textiles and garments has been raised from 11% to 13%, and adjustments have been implemented since August 1, 2008. The argument for raising the export tax rebate rate has been circulating in the industry for several days. Now that it has become a reality, its impact is immediate. China First Textile Network believes that the export tax rebate rate will be adjusted by one percentage point, which is equivalent to directly increasing the total amount of corporate exports by 1% to the corporate profits. For export-oriented enterprises, the positive effect of the export tax rebate rate is direct. quickly. However, Sun Huaibin, director of the China Textile Economy Research Center, stated that “the increase in export tax rebate rate can reduce pressure on companies due to rising costs, but it will not affect market demand, especially as the global economy is facing a recession and international market demand is declining. The impact on the export of the textile industry is considerable. "The biggest problem in the current textile industry is the problem of a stagnant demand market. Due to the appreciation of the renminbi, the labor costs in neighboring countries such as Vietnam and Cambodia were low, causing customers in the international market to turn to these neighboring countries. In the short term, the increase in the export tax rebate rate to increase the enthusiasm of the textile mills remains to be observed. Only the spinning mill's operating rate has rebounded significantly, in order to increase the demand for polyester procurement.
Judging from the overall performance of the polyester market in the near future, crude oil holds the key point of US$120/bbl, forming psychological support for the downstream market. In addition, the expectation of raising the export tax rebate rate has now become a reality, and the positive impact on the market mentality is also immediate. The upstream raw material market is showing signs of initial signs, but it is still necessary to observe for a period of time whether the bottom of the polyester market can be truly established. The focus of late-stage market concerns include: 1. Whether the crude oil market can really stand in the 120-130 USD/barrel range; in August and August, the ACP is locked above or below 1400 USD/ton CFR Asia; 3. The export tax rebate rate is raised How will the enthusiasm of the textile mills be improved?

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