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SunSirs: Crude Oil And Cotton Are Rising, China's Textile Sector Deserves Attention
October 08 2021 09:24:47SunSirs(Linda)

During the National Day holiday, Brent crude oil broke $80 and U.S. cotton rose strongly to a ten-year high. As the two major raw materials of the textile industry, the next textile sector deserves attention! Specifically:

Brent crude oil price trend in the past 3 months

During the National Day, foreign oil continued to maintain its strength despite the global energy resonance. As of 8 a.m. Beijing time on October 7th, Brent’s main contract rose 3.79% from the close of September 30th to US$80.83/barrel, setting a record in October 2018. The highest level since the WTI main contract rose 3.39% from the close of September 30, to 77.21 US dollars / barrel. Although crude oil in the two cities has experienced a rise and fall, Brent has stabilized above $80. As the temperature in the northern hemisphere decreases, the increase in demand for crude oil has gradually shifted from travel to heating, and the total summer demand has declined. However, with global destocking and OPEC maintaining production reductions, supply and demand will remain tight. It is expected that in the short term Will remain strong.

The current price trend of domestic cotton in the past 3 months

Outer disk cotton broke 100 cents/pound before the long holiday, hitting a 10-year high. During the long holiday, it continued to maintain its strength. As of 8 am on October 7th, it was up over 6% from the close of September 30th. The short-term driver of domestic cotton prices is still the rush to harvest new cotton. There is rain and snow in northern China, and the purchase price of new cotton continues to rise. It is understood that the cost of new cotton has risen by more than 2,000 yuan/ton during the long holiday. The cotton-producing areas in northern India were affected by both heavy rains and insect pests. The price of cotton in India has also risen sharply, as well as the optimistic expectations of winter cotton demand, which together contributed to the rise of cotton prices. However, affected by the "dual control" policy and poor new overseas orders, the transmission of cotton prices to the middle and lower reaches may be hindered, and the increase in the purchase price of new cotton will slow down. As the supply of new cotton increases, it is necessary to prevent the risk of falling prices after a short-term price rise.

The current domestic PTA price trend in the past 3 months

Next, several sets of PTA devices will announce maintenance plans, and Hengli Petrochemical will supply 60% of the contracted supply in October, and the supply side will be improved. In addition, the price of Brent oil exceeded US$80, which provided strong support for the cost of PTA. At the same time, during the National Day, the price of filament rose by 100-300 yuan/ton, and the terminal cloth factories increased the prices of finished products one after another along with them. The orders are currently acceptable. It is expected that the construction of looms in Jiangsu and Zhejiang will resume after the start of the National Day, and the demand side will also pick up. PTA prices are expected to continue their upward trend after the National Day.

The current price trend of domestic polyester staple fiber in the past 3 months

During the National Day, polyester short-term production and sales were better, and prices generally rose by 300-400 yuan/ton. The current low inventory levels of downstream terminals and traders continue to open a small replenishment cycle. The limited production of polyester staple fiber and the dual control of energy consumption affect the reduction of production and production and maintenance, and the supply has been greatly reduced, and the cost of raw materials has risen. In addition, raw material costs have risen, PTA prices have risen due to dual-control production restrictions and increased equipment overhauls, and ethylene glycol prices have continued to rise due to high coal prices and declines in main port inventories. It is expected that short fiber futures prices will continue to rebound.

Textile index trend in the past 3 months

From the perspective of the textile industry, the business community textile index hit the highest level since August last year. As of September 30, 2021, the textile index was 1007 points, an increase of 15 points from the beginning of September and the highest point in the cycle on September 3, 2018. 1156 points decreased by 12.89%, which is an increase of 47.87% from the lowest point of 681 points on August 13, 2020. (Note: Period refers to 2011-12-01 till now)

The “Golden September” in the terminal textile industry shows exhaustion due to insufficient fineness, which restricts the upward momentum. However, under the sentiment of buying up and not buying down, the contradiction on the demand side will be eased. In addition, orders for the peak terminal consumption season in October will also improve, or will accelerate the digestion of inventory in various links, which is conducive to the restoration of industrial profits. At the same time, under the influence of the "dual control" policy and the general rise of domestic commodities, it is expected that the textile market in October will easily rise but never fall.

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