What will happen to the polyester industry in 2019 against the background of declining overall deman

In recent years, the polyester industry has changed a lot: the production capacity has been accelerated, the production capacity of polyester in 2018 exceeds 50 million tons; the utilization rate of production capacity has increased; since 2016, the starting rate of polyester has been rising, the peak season has weakened, the average load of polyester in the first three quarters of 2018 is over 90%; the industrial structure of polyester has been adjusted, the concentration of production capacity has been improved, leading enterprises rely on financial advantages, and new production capacity has been continuously put in. And mergers and acquisitions of peer enterprises are launched.



There are more than 80 enterprises in the polyester filament industry. At present, the expansion of polyester filament production mainly focuses on leading companies such as Tongkun, Xinfengming and Hengyi, and the production capacity is still concentrating on large enterprises. With the further improvement of productivity concentration, the voice right of polyester will be further enhanced.



Review of Polyester Market in 2018



In the first half of the year, the overall trend of polyester products shocks mainly; affected by the upstream PTA rising first and then falling, the price of polyester products in the second half of the year first restrained and then rose. In the first half of the year, the production profit of polyester and polyester was better, especially the production profit of polyester bottle flakes. The overseas demand of bottle flakes was blowout, and the supply and demand of domestic bottle flakes were tight, which promoted the price to soar. The production profit of polyester bottle flakes once reached 2500 yuan/ton.



The profit of polyester and polyester production fluctuated greatly in the third quarter. From July to early September, the price of polyester and polyester products rose, but the increase was smaller than that of PTA in the same period. The pressure of rising cost of polyester and polyester was difficult to transfer downward, and their production profits were greatly reduced, and some varieties suffered large losses. In mid-late September, with PTA spot prices falling rapidly, polyester and polyester production profits improved, and production profits of some varieties reached new year highs. In the fourth quarter, the production and marketing of polyester remained at a low level, the demand weakened obviously, and the stock of polyester filament accumulated rapidly, reaching the high point after the Spring Festival, further lowering the price of polyester, and the profit of polyester production was compressed again.



Prospect of Polyester Market in 2019



Productivity/output growth rate in 2019 may be reduced: from the current planned capacity, 780,000 tons of capacity will be put into production in 2018 but may be delayed. We assume that production will be completed in April-June next year and 6.85 million tons in 2019. We assume that 1/2 of capacity will be available and that capacity will evenly distribute in April-December, so that capacity growth in 2019 is expected to be 7.8% and production growth rate will be 4.67%. If two-thirds of the production capacity is assumed to be put into operation, it is expected that in 2019 the production capacity will increase by 9.9% and the output will increase by 5.81%.



Textile and apparel demand in 2019 is at risk: 70% of polyester terminals are related to textile and apparel, so it is necessary to judge the strength of polyester demand according to the sales situation of textile and apparel. As textile and apparel belong to consumer goods, the general trend of textile and apparel has a high correlation with China's overall economic situation and GDP. According to historical data, China's economic cycle lasts about four years. This cycle has lasted about two and a half years since the second half of 2016, and has entered the second half of the downward cycle. Therefore, domestic demand for textile and apparel will remain weak before the first half of 2020.



Terminal investment or slowing down in 2019: From the perspective of fixed assets investment in terminal textile industry, it has a certain correlation with the profits of industrial enterprises, which can also be confirmed by the number of new terminal bomber. In 2016, the number of new bomber is still small, but in 2017-2018, the explosive growth of bomber is expected, but in 2019, the number of new bomber is expected to return to the low level again.



The Sino-US trade war in 2019 is an uncertain factor: the first 50 billion US dollars commodity tax in Sino-US trade war basically does not involve the textile and clothing industry; the second 200 billion US dollars tax list covers most textile raw materials, semi-finished products and a small number of apparel accessories. The textile and clothing products involved in the war will export about 4 billion US dollars to the United States in 2017, accounting for about 10% of China's total textile and clothing exports to the United States. Domestic textile and apparel enterprises cope with this problem through the transfer of entrepot trade and production capacity to Southeast Asia. The impact of trade war has not been reflected in the data. In 2019, the downside risks of the world economy will increase, and China's foreign trade environment will become more severe. Export shocks may be concentrated in the first half of the year.



The prosperity or end of polyester in 2019: The prosperity of polyester declined after reaching its peak in 2010. After the low prosperity cycle of 2012-2015, 2016 ushered in dawn. At present, polyester has gone through nearly three years of prosperity cycle. With the rapid release of polyester production capacity, terminal investment slowed down, and terminal demand internal and external pressure, it is expected that the prosperity of polyester in 2019 will weaken year-on-year.



In a word, from 2017 to 2018, downstream production increased rapidly, terminal demand rebounded and industry replenishment cycle reached a high point. Although the production capacity of polyester to be put into production in 2019 is still large, the overall demand will decline in the context of the downturn in the polyester industry prosperity will decline. Polyester production is likely to end the two-year high growth of more than 10%. It is estimated that the growth rate of polyester production in 2019 will be around 6-8%. Watch out for the risk that demand will continue to fall sharply.