In the fourth quarter of 2016, the polyester market entered a “new boom cycle”, with market conditions soaring and industry profits reaching new highs. However, the polyester market situation took a turn for the worse in the first quarter of 2017. After the second quarter, new polyester production capacity will be gradually released. In addition, polyester factories that were bankrupt and liquidated in the early stage have been acquired one after another. The road to overcapacity in the polyester market is still arduous. There is a long way to go, and the industry’s “new business cycle” is not optimistic either.
In 2015, the profitability of the polyester market began to weaken, and the industry’s “cyclical trough” lingered for a long time after the emergence of the industry. Polyester companies had to go through difficult days, but they have experienced the bankruptcy liquidation of some companies and the annual two-month low. After the large-scale shutdown of the polyester market for maintenance, related products in the polyester market began to rise crazily in the fourth quarter of 2016. The polyester filament market, which accounts for half of the polyester market, has the most obvious fluctuations. As shown in the figure, in the fourth quarter of 2016, during the traditional off-season, the polyester filament market experienced an arrogant rise that was rare in recent years; and during the traditional peak season in March 2017, the polyester filament market showed another A new situation of cliff-like decline. Faced with the new market normal that is contradictory to the traditional “low and peak season” market conditions, the polyester industry is still facing an urgent need to reduce overcapacity.
During the Lunar New Year in 2016, polyester factory inventory pressure increased, causing many polyester factory units to shut down for maintenance, involving a total of more than 13 million tons of polyester production capacity, and the unit maintenance lasted for more than a month. At the end of August of the same year, around the time of the “G20 Summit”, surrounding chemical plants were shut down, and environmental pressure once again led to the shutdown of a wide range of polyester factory facilities, involving a total polyester production capacity of around 12 million tons. The facility maintenance lasted for more than half a month. At the same time, due to overcapacity in the polyester industry, profits in related industries in the polyester market have dropped significantly in recent years, and competition among peers has become fierce. In recent years, polyester factories have gone bankrupt one after another, and the old equipment of some polyester factories have been parked year-round due to high processing costs, involving a total of more than 2 million tons of polyester production capacity. This series of factors are superimposed on each other, resulting in tight supply in the polyester market in the fourth quarter of 2016. Therefore, once the polyester raw material market rises, the polyester market will immediately follow suit. When the polyester raw material market weakens, polyester factories will mostly stabilize prices and wait and see appropriate discounts. Therefore, the profits related to the polyester industry are very considerable.
During the Lunar New Year in 2017, the maintenance of polyester factory equipment only involved less than 7 million tons of production capacity, and there is no periodic maintenance plan for mainstream polyester factories this year. In addition, according to Jin Lianchuang’s understanding, the polyester industry is still in the channel of inertial growth in production capacity. According to the statistics of polyester production capacity under construction and planned, the new polyester production capacity this year is around 4.82 million tons. It is expected that by the end of 2017, the polyester production capacity will be around 4.82 million tons. The total production capacity will exceed 50 million tons, but downstream demand is expected to be less than 40 million tons. Taken together, the theoretical operating rate of the polyester industry in 2017 may be around 75%, while the average operating rate of the polyester industry in the first quarter is around 78%. In addition, the current inventory pressure of some polyester factories is still there, and the operating rate of the polyester industry in the future may be around 78%. Difficult to maintain a high position. Therefore, the overcapacity reduction situation in the polyester industry this year is still severe, and some production capacities may be delayed in production. Moreover, polyester production capacity with poor economic benefits and backward equipment may continue to be eliminated.
Competition in the polyester market is intensifying. On the one hand, polyester factories with poor competitiveness and serious losses will continue to be shuffled by the market. On the other hand, the industrial concentration in the polyester market will continue to rise. According to Jin Lianchuang’s understanding, following the successful listing of Hengli Group last year, Xinfengming Group also officially became a listed company in March this year. Capital is still very fond of the “big guys” in the polyester industry. The listed company Hengyi Group acquired Hongjian Group in March this year, and together with Longteng Chemical Fiber acquired at the end of last year, its polyester production capacity continues to expand, making it the “biggest player” in the polyester industry after Tongkun Group. The polyester factories that increased their production capacity in April this year were Tongkun Group and Wankai New Materials. They are both million-level polyester factories; the polyester and polyester equipment that will be put into production in the second quarter is also produced by million-level polyester plants. Factory – Xinfengming Group.
At present, the structural, regional and periodic surplus situation in the polyester market industry is still severe, and the weak downstream demand has not improved. The situation faced by polyester factories is still difficult to say optimistic, but for the sustainability of the polyester industry Development still has to go through the pain of “cutting overcapacity”.
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