Market this week – W29

Summary: Oil dropped, PTA and MEG fluctuated up, Polyester chip rose slightly, Polyester filament yarn promoted and rose, PSF fluctuated, VSF increased slightly.


1,Oil prices both closed down this week. Due to the deadlock in OPEC+’s production policy, the market has been turbulent for several consecutive days. Last week, oil prices fell for the first time since May. The two major crude oil futures continued their decline since last week on Monday. On Tuesday, news showed that OPEC may abandon reaching the August production agreement. The market expects that the supply will be further tightened in the short term. In addition, the decline in US crude oil inventories has boosted oil prices to close up sharply. On Wednesday, the OPEC+ storyline ushered in a major reversal. According to OPEC+ sources, Saudi Arabia and the UAE have reached a compromise on the oil production agreement, and oil prices plunged 4%. A representative of OPEC+ stated on the previous trading day that the UAE has resolved the deadlock with OPEC+ and reached a compromise agreement that will set a new oil production quota. The two major crude oil futures continued the decline of the previous trading day on Thursday.


2,PTA price fluctuates strongly. The decline in the cost side is the main reason for the decline in PTA prices. Although crude oil inventories in the United States have fallen, gasoline and refined oil inventories have increased significantly. In OPEC, Saudi Arabia agreed to increase the production base of the UAE. After the news came out, oil prices fell sharply. This week, Taihua’s planned shutdown, Fuhua’s 4.5 million tons of equipment fell to 80%, and the short-term decline of Yisheng’s new equipment, the supply has been significantly reduced. The demand for replenishment of polymer factories and traders has rapidly increased the spot basis. Under the expectations of the polyester peak season, polyester factories and some traders still have replenishment demand, which will be supported in the short term. It is expected that the PTA will maintain strong pattern in the short term.


3,MEG prices rose strongly, market transactions were active, and the spot basis slightly strengthened. In the first half of the week, MEG prices fluctuated upwards, which was significantly affected by equipment news. From August to September, the domestic coal-based MEG equipment was intensively repaired. At the same time, two sets of equipment in Saudi Arabia were temporarily shut down, which significantly boosted the market mentality. During the mid-week crude oil market adjustment process, MEG fell slightly, but the low market buying support was obvious. As of Friday, MEG prices surged and fell sharply, with violent intraday fluctuations. The running ratio of polyester production is maintained at around 93-94%, the rigid demand support is obvious, and the downward transmission of the industrial chain is relatively smooth. It is expected that in the short term, MEG prices will be kept strongly.


4,Polyester chips fluctuated. The rebound of crude oil at the beginning of the week led to a slight upward rush of polyester raw materials, and the low prices of chip traders rose somewhat. However, as crude oil fell again in the second half of the week, the market trading atmosphere fell, and the quotations of mainstream factories remained stable during the week. the overall transaction was generally average, and the downstream replenished at low price. It is expected that polyester chips will maintain a range of shocks.


5,Polyester filament yarns in Jiangsu and Zhejiang run oscillatingly, slightly stronger for POY and DTY, and slightly weaker for FDY. At the beginning of the week, polyester filament factories promoted, especially for FDY, where the preferential margin was relatively large, and POY was partially discounted; on Tuesday, under the combined effect of promotion and rising costs, polyester filament sales turnover increased again; polyester filament prices rose on Wednesday, but sales turnover weakened; On Thursday and Friday, the price remained stable. The South China polyester filament factory remained stable, and some transactions were negotiated. In the export market, the export quotations of polyester filaments continued to rise sharply, but the overall export orders were not as good as last week. On the one hand, due to the excessive rise in yarn prices, foreign customers need time to adapt. On the other hand, the sharp drop in crude oil affected the market mentality. From the current point of view, although crude oil has been adjusted in stages, the overall upward trend has not changed, and the current polyester yarn inventory pressure is not great. The short-term forecast is mainly for the stability of the filament yarn prices.


6,Polyester staple fiber fluctuated weakly, and the cash flow was once again compressed to near the cost line. In the first half of the week, the trend of polyester raw materials and PSF futures was relatively strong. The factory sold goods at low prices and moderately destocked. The cash flow quickly compressed to near the cost line. Subsequently, crude oil and polyester raw materials quickly dropped, PSF also quickly followed the decline, and factory prices also gradually fell. On Thursday, futures stopped falling and rebounded, and futures prices rose. The market as a whole maintains a wait-and-see digestion. If the price adjusts and decreases, the downstream low position replenishment will appear again.


7,Viscose staple fiber moved up slightly. Some orders for high-end Sateri have been fulfilled, the overall pre-sales are good, the new quotations in mid-week continue to increase, and Tangshan Sanyou maintains the original prices. Mid-range fiber quotations moved up slightly. There are still some orders in the export market this week, and the export FOB price has increased to about US$1.8/kg. After the periodical increase in viscose staple fiber, there is little operating pressure, and the downside risk disappears in the short term. Although the downstream has improved somewhat, the overall situation is hard to say. The foundation for the recovery still needs to be consolidated. It is expected that the viscose market will remain stable next week, and a small test increase is not ruled out.