Outside of the traditional “three gold, silver, four” and “gold nine, silver ten” peak seasons, the profit level of polyester filament per ton is expected to be stable in the off-season. We are optimistic that the price difference of polyester filament will be repaired as domestic and foreign demand improves throughout the year.
The Zhitong Finance App learned that Guohai Securities released a research report, according to Wind, on May 10, 2024, the POY price was 7,450 yuan/ton, with a price difference of 1,063 yuan/ton; the FDY price was 8025 yuan/ton, with a price difference of 1,638 yuan/ton; and the DTY price was 9025 yuan/ton, with a price difference of 2,683 yuan/ton. In May, the load on the supply side of polyester filament decreased, which is expected to effectively ease the pressure on companies' inventories. Outside of the traditional “three gold, silver, four” and “gold nine, silver ten” peak seasons, the profit level of polyester filament per ton is expected to be stable in the off-season. We are optimistic that the price difference of polyester filament will be repaired as domestic and foreign demand improves throughout the year. Maintaining the chemical fiber industry's “recommended” rating by comprehensively considering the recovery of domestic and external demand in the polyester filament industry and the future growth of industry leaders.
Key recommended stocks: Tongkun Co., Ltd. (601233.SH), Xinfengming (603225.SH), Rongsheng Petrochemical (002493.SZ), Hengli Petrochemical (600346.SH), Hengyi Petrochemical (000703.SZ), Dongfang Shenghong (000301.SZ).
A number of polyester filament spindles jointly reduced the burden by 10%, and the industry's supply and demand pattern continued to be optimized
On May 11, 2024, Baichuan Yingfu announced the operation status of the domestic polyester filament plant. Tongkun Co., Ltd., Xinfengming, and Dongfang Shenghong plan to cut plant production on May 13, 2024. The production reduction rate is about 10%, and the restart time is uncertain. By the end of 2023, Tongkun Co., Ltd., Xinfengming, and Dongfang Shenghong's polyester filament production capacity was 13.5 million tons/year, 7.4 million tons/year, and 3.55 million tons/year (including 550,000 tons/year of renewable polyester fiber production capacity). If Dongfang Shenghong's 550,000 tons/year renewable polyester fiber production capacity is not taken into account, the corresponding reduction in production capacity is 2.39 million tons, accounting for about 5.6% of the effective production capacity of polyester filament in April 2024.
In addition, some long-term installations of Rongsheng Petrochemical and Hengyi Petrochemical were repaired and stopped, involving filament production capacity of 800,000 tons/year and 480,000 tons/year respectively, causing short-term supply in the market to decline. As many polyester filament leaders jointly cut production, it is expected that the industry's supply and demand pattern will be further optimized, and it is optimistic that the polyester filament boom will be maintained throughout the year.
Domestic and external demand recovered significantly in 2024Q1, and the intensification of upstream and downstream games led to pressure on inventories
In the first quarter of 2024, the domestic and foreign demand for textiles and clothing in China improved significantly year-on-year. According to data from the China Textile Federation, in the first quarter of 2024, China's total retail sales of social consumer goods reached 12 trillion yuan, +4.7% year on year. Online retail sales of clothing products in China were +12.1% year on year, +3.5 pct year on year, and total textile and garment exports were 65.91 billion US dollars, +2% year on year, and +8.7 pcts year on year. According to Wind, 2024Q1, the apparent domestic consumption of polyester filament was 8.05 million tons, +51.1% over the same period last year. Overseas, according to Wind, the inventory sales ratio of American clothing and garment fabric wholesalers in March 2024 was 2.32, and the downward trend has continued since May 2023.
2024Q1, the shipping crisis is compounded by tension in the Middle East. International oil prices have fluctuated sharply. Downstream companies are mainly stocking up on immediate demand, and the intensification of upstream and downstream games have put pressure on inventories. According to Baichuan Yingfu, as of the end of the first quarter of 2024, the comprehensive operating rate of chemical fiber weaving in Jiangsu and Zhejiang was 82.42%. According to Baichuan Information, as of May 9, 2024, POY inventory is around 28-32 days, FDY inventory is around 21-26 days, and DTY inventory is around 25-30 days. On May 9, 2024, the average number of domestic terminal weaving order days was about 14.33 days, down 1.23 days from last week.
Risk warning: Polyester filament production cuts fall short of expectations; crude oil prices fluctuate greatly; overseas storage falls short of expectations; industry competition intensifies; environmental policy risks; macroeconomic fluctuation risks; exchange rate risks; focus on the company's performance falling short of expectations.