Polyester Segment: "Proactive Defense" Amid Low Operating Rates and Low Inventories
Faced with a certain demand vacuum, polyester plants, especially polyester filament plants, have adopted a more resolute "proactive defense" strategy than in previous years.
1. Unprecedented Production Cuts: Around the Spring Festival this year, major plants jointly increased production cuts, with the operating rate of direct-spun filament expected to drop to a minimum of 74%, about 6 percentage points lower than the same period last year. This move aims to rigidly control the rate of inventory accumulation.
2. Inventory and Costs Provide Short-Term Support: Due to relatively good sales in the previous period, the current inventory level of chemical fiber plants is relatively low. Coupled with rising costs and a compressed processing range, factories have a weak willingness to lower prices and promote sales, generally adopting a "flooring" mentality for product prices.
3. Gambling on Future Demand: Factories are generally confident that due to the shortened downstream stocking cycle and low raw material inventory, there will inevitably be rigid restocking demand after the holiday. The current production cuts are precisely to ensure a "good start" when demand recovers, with healthier inventory levels and stronger bargaining power.
Raw Material Side (Ethylene Glycol): Negative Factors Become Visible, Awaiting Weak Improvement in Supply and Demand
Ethylene glycol is currently the weakest link in the industrial chain, but all negative factors have now become apparent.
1. Strong Inventory Accumulation: The combined pressure of high operating rates, high arrivals, and high inventory levels has led to a clear expectation of strong inventory accumulation in the January-February balance sheet.
2. Cost Support and Initial Supply Contraction: The naphtha-EG price spread has recently narrowed sharply, reaching the cash flow cost line for some plants. Syngas-based plants have already planned shutdowns due to losses, and the operation of oil-based plants is also limited. In the medium term, low prices will suppress the recovery of supply.
3. Decreasing Imports: Overseas supply has declined since the end of last year when inventories were cleared. After three consecutive months of high arrivals, the unloading volume of ethylene glycol from foreign vessels will gradually decrease starting last week, and the reduction in Saudi supply is gradually materializing. In the second half of the month, domestic and foreign vessel arrivals will be more dispersed.
It is expected that starting in March, with the implementation of domestic maintenance and a potential contraction in imports, the supply-demand balance will shift towards moderate destocking, resulting in a slight month-on-month improvement. However, this trend reversal is highly dependent on the progress of large-scale plant conversions or maintenance, and its own driving force is weak.
Meanwhile, the fundamental logic for PX and PTA has not changed significantly recently. Against the backdrop of accelerating weakening polyester operating rates, near-term performance is under pressure, but long-term expectations remain relatively strong. In the short term, the influence of macroeconomic sentiment and external markets will play a greater role in subsequent polyester raw material price fluctuations. Before the holiday, prices are likely to consolidate sideways. Attention should be paid to the pace of resumption of work and the intensity of restocking after the holiday.
