The impact of crude oil decline on the chemical fiber industry

The chemical fiber industry has a close relationship with oil. More than 90% of the products in the chemical fiber industry are based on petroleum raw materials, and the raw materials of polyester, nylon, acrylic, polypropylene and other products in the industrial chain come from petroleum, and the demand for petroleum is rising year by year. Therefore, after the sharp decline in crude oil prices, the prices of naphtha, PX, PTA and other products fell, and the prices of downstream polyester products were also indirectly pulled down by conduction.

A set of 15 years of data:

In 2015, due to the impact of falling oil prices, coupled with weak downstream demand and other factors, the average operating rate of the domestic PTA industry was only 67.17%, and the average product price fell by 28% year-on-year. The average price of polyester products, including bottle chips, slices, staple fibers, etc., also fell by more than 22%;

In the industry for a long time, familiar with a variety of operating rates, prices, inventory year-on-year changes, in order to have a sense of the entire industry profit cycle.

According to common sense, the decline in raw material prices should be conducive to the procurement of raw materials by downstream polyester customers, but the company said that it did not dare to buy materials, which is why?

This is because raw materials from procurement to make products take a long time, and polyester factory procurement raw materials need to order in advance, compared with the market there is a lag process, ordering may be 5,000 yuan/ton, and the market price of raw materials after the arrival of 4,000 yuan/ton, resulting in the depreciation of products made with raw materials, resulting in a decline in corporate profits.

Although the decline in oil prices has significantly reduced the cost of raw materials in the polyester industry and eased the tension of the corporate capital chain, the company is still losing money. "For example, although the cost of raw materials you buy has dropped from 10,000 yuan/ton to 5,000 yuan/ton, but under the overall downward market, the products you use raw materials to make may be 4,000 yuan/ton to sell, in the case of high buy low throw, the enterprise is still impossible to make a profit."

Another head of the production department of a well-known polyester company in Fujian also expressed a similar view. He said that when companies buy raw materials, they generally buy up rather than down. When oil prices fall, the purchase of raw materials will be more cautious, in this case, this will exacerbate the price decline of bulk products.

The factory should run 24 hours a day, the number of raw materials used is large, and the polyester factory should order raw materials in advance, which is a lagging process compared with the market. If the price of raw materials ordered half a month in advance is 5000 yuan/ton, and the market price of this raw material has fallen to 4000 yuan/ton after the arrival of this raw material, the price of products made using raw materials will also depreciate, which will cause problems in the efficiency of enterprises.

Looking back 15 years, in the context of the polyester industry chain oversupply, the fall of the upstream raw material crude oil makes the polyester factory suffer a dilemma, open equipment suffered discount sales, profit is worrying, do not open equipment staff and easy to spread, as a reminder, if oil prices fall for a long time, and domestic demand is not boosted (polyester fiber domestic sales account for the majority), Chemical fiber leading new Fengming, Tongkun and other enterprises need to beware of such risks.

"In 2008, when the financial crisis, the product price of the entire polyester chain was also at a relatively low level, but in 2015, the price of polyester products fell below the price of the financial crisis." The financial crisis when the PTA price fell to the lowest 4300 yuan/ton, and in August 2015, the PTA price has fallen to 4100 yuan/ton below, polyester staple fiber prices from the financial crisis when the lowest 7,000 yuan/ton fell to the current 6200 yuan/ton." "At present, large polyester enterprises based on conventional products are basically losing money, while those based on differentiated products, small scale and advanced technology enterprises may be better."

Another person in charge of Zhejiang Polyester enterprise also said: "In 2015, POY was in a full-year loss state in polyester filament products. DTY is relatively profitable, with an average profit of only 500 to 600 yuan per ton throughout the year."

In the case of enterprises "dare not buy materials", it will directly affect the normal production of enterprises.

"At present, the entire polyester industry chain itself is in oversupply, when the price of raw materials falls, everyone is not willing to buy, but if the production of raw materials is used up, it will cause the equipment is not open, stop is not the" dilemma "dilemma. Because if the equipment is on, there is no profit to be expected, and if the equipment is not on, the staff will be scattered." The person in charge of the production department of the well-known polyurethane enterprise in Fujian sighed. "Right now, everyone's having a hard time, and it's just a matter of who makes it to the end."

The person in charge said that under the pressure of raw materials, labor, capital and so on, many chemical fiber companies will use the Spring Festival holiday in advance, and postpone the start time after the festival. Last year, workers at companies in Fujian had five to seven days off in advance, but this year, they have 10 to 15 days off.

In this case, the industry operating rate has also fallen sharply. In early January 2016, the overall opening rate of the domestic polyester filament industry declined to 65.5%, a sharp decline of 5% from the end of 2015. The comprehensive opening rate of weaving enterprises in Jiangsu and Zhejiang areas has dropped to about 55%.