Analysis Of Polyester Staple Market Impact: Low Oil Price, Cost Dividends

Since the global public health incident, the supply and demand of crude oil has been seriously mismatched. Under the pressure of oversupply, the market has fallen from a continuous downward trend. By the end of April, the occupancy of the storage capacity was close to the ceiling, which was a detonation of market sentiment, which eventually led to the collapse of futures prices. The US oil May contract experienced an unprecedented negative oil price. The era of low oil prices is coming. As the raw materials of the bulk energy and chemical industry, the cost of raw materials will drop. Then, does it mean that low staple dividends can be enjoyed for polyester staple fiber? The following is a brief analysis of cotton polyester staple fiber.

The cost bonus refers to the decrease in polymerization cost of polyester staple fiber compared with the decline in price and the increase of cash flow in the case of stable processing fees. The cash flow is the value that reflects the profit level of polyester staple after calculating the aggregate cost according to the closing price of the raw material. Although it is different from the actual profit of the factory, it can still largely reflect the overall profit trend of the industry.

How does crude oil affect the cost of polyester staple fiber?

The raw materials for polyester staple are PTA and ethylene glycol. Crude oil is affected by the "crude naphtha -PX-PTA" and the "crude naphtha ethylene glycol" chain of transmission, which affects the price of the two products, thereby indirectly affecting the polymerization cost of polyester staple fiber.

Cash flow change of polyester staple fiber

As public health events have great impact on all sectors, there is a great degree of fluctuation in price, cost and cash flow. From the above chart, we can see that cash flow of polyester staple has been on the rise this year. According to long Zhong information statistics, the average cash flow of polyester staple fiber in 2017, 2018 and 2019 averaged 378 yuan / ton, 358 yuan / ton, and 210 yuan / ton respectively. Since 2020, the average cash flow of polyester staple fibers has averaged 465 yuan / ton, especially since the oil price started to collapse in early March. The cash flow of PET staple fiber has been significantly improved. Besides the decline in the cost of polymerization, by the beginning of April, due to the hype of demand for epidemic prevention materials and the spread of some specifications of polyester staple products, the overall market price has been promoted, which has further raised the level of cash flow. But by the middle of April, the cash flow of polyester staple began to drop sharply, so the current high cash flow status is not strong enough.

Demand is low, pressure on profit realisation is high.

After the rapid development of public health events into global events, the domestic demand and external demand of polyester staple are all suppressed. Besides the production and sales volume of some products that are related to the specifications of the epidemic prevention and hygiene materials, the production and marketing of the main cotton patterns have been in a doldrums. According to long Zhong information statistics, since 2020, most of the polyester fiber production and marketing level is lower than the same period last year. Under the low production and marketing level, high cash flow can hardly be turned into actual profits. In order to avoid storage, the factory will still choose to compress the cash flow.

In summary, since the oil price has gone down, the cash flow of PET staple has been enlarged. However, under the pressure of actual supply and demand, the level of cash flow is also shrinking rapidly. The demand is in a slump or will continue to inhibit the cash flow space.