Event:
Recently, the operating rate of Jiangsu and Zhejiang looms has gradually picked up. According to wind, the load rate of Jiangsu and Zhejiang looms increased from 46.55% on April 13 to 58.30% on May 19. Meanwhile, the margin of polyester filament price difference has improved. According to wind, as of May 20, the price difference of POY reached 899 yuan / ton, up 67.82% from 536 yuan / ton in early May. Key investment points:
The price of polyester filament rose, and the price difference ushered in marginal improvement
Affected by the continuous rise of upstream PTA price, the price of polyester filament showed an overall upward trend in Q1 in 2022; In April, affected by the epidemic and other factors, the operation of downstream looms was sluggish, the demand decreased, and the filament price fell. Among them, the average price of POY market fell from 7950 yuan / ton at the beginning of April to 7700 yuan / ton at the end of April, with a cumulative decline of 3.14%; In the same period, PTA price rose from 6030 yuan / ton at the beginning of April to 6425 yuan / ton at the end of April, with a cumulative increase of 6.55%. The decline of product price superimposed on the rise of raw material price, and the price difference of polyester filament shrank. The price difference of POY fell from 1056 yuan / ton at the beginning of April to 536 yuan / ton at the end of April, with a cumulative decline of 49.24%. The profit of filament enterprises is under pressure. In May, with the effective control of the epidemic and the gradual repair of downstream demand, the filament price ushered in a rapid rise. As of May 20, the POY price reached 8400 yuan / ton, up 9.09% from 7700 yuan / ton in early May. At the same time, the price difference of polyester filament also ushered in marginal improvement. As of May 20, the price difference of POY reached 899 yuan / ton, up 67.82% from 536 yuan / ton in early May.
The start-up of Jiangsu and Zhejiang looms is gradually picking up, which is expected to drive the growth of filament demand
As the direct downstream of polyester filament, the operating load of loom reflects the demand of polyester filament to a certain extent. With the gradual control of this round of epidemic and the recovery of logistics and transportation, the operating rate of downstream looms began to rise gradually from mid to late April. According to wind, the load rate of Jiangsu and Zhejiang looms has steadily increased from 46.55% on April 13 to 58.30% on May 19. The downstream operation is gradually improving. The increase of operating load of downstream looms will effectively stimulate the growth of polyester filament demand. We are optimistic about the continuous repair of polyester filament profits in the later stage.
Sea freight continued to decline, which was good for textile exports
China is the world’s largest exporter of textiles and clothing, and export orders account for a large proportion in China’s textile production. In 2021, there was a shortage of shipping containers, resulting in poor delivery of some export orders; At the same time, the price of sea freight has risen sharply. For textiles with relatively low unit value, the cost has risen sharply, which has restrained the demand from overseas to a certain extent, and textile foreign trade enterprises are facing great business pressure. Since 2022, sea freight has continued to decline. According to Bloomberg, as of May 20, the FBX index from China to the west of the United States reached $12512 / feu, a cumulative decline of – 39.2% compared with the high of $20586 / feu in 2021; The FBX index from China to Europe reached US $10565 / feu, a cumulative decline of 29.6% compared with the high of US $14999 / feu in 2021. With the mitigation of shipping problems and the decline of shipping charges, the problem of difficult delivery of foreign trade orders has been effectively solved. At the same time, China’s textile price advantage has also been revealed, and textile exports are expected to improve, thus driving the increase of upstream polyester filament demand.
Industry rating and investment strategy: considering the gradual recovery of the start-up of downstream looms, the rise of polyester filament price and the marginal improvement of price difference, we give the industry a “recommended” rating.
Focus on recommending individual stocks Hengli Petrochemical Co.Ltd(600346) , Rongsheng Petro Chemical Co.Ltd(002493) , Jiangsu Eastern Shenghong Co.Ltd(000301) , Tongkun Group Co.Ltd(601233) , Hengyi Petrochemical Co.Ltd(000703) , Xinfengming Group Co.Ltd(603225) .
The implementation of risk warning policies, the construction progress of new production capacity is not up to expectations, the contribution performance of new production capacity is not up to expectations, the price of raw materials fluctuates, the change of environmental protection policies, the economy drops sharply, and the price of crude oil fluctuates sharply.
