Hollow fiber: Original hollow fiber may release new production capacity in June, and the risk of off-season decline will intensify

Strong supply and weak demand in June, expected to increase as costs decline

On the demand side, the off-season will continue to weaken the downstream purchasing ability for native hollows; On the supply side, some pre maintenance manufacturers resumed production in June, and there are plans to release new production capacity in the industry. The supply of raw hollow materials will significantly increase compared to May, which is one of the bearish factors; On the cost side, due to the worsening imbalance between supply and demand of dual raw materials, the air atmosphere is strong in the short term, and the only driving factor that can drive the price increase of primary hollow materials in the off-season is almost hopeless.


Low demand and increased bearish sentiment have suppressed downstream buying intentions. In the midsummer of June, the primary raw material for filling cotton quilts and cotton clothing is the home textile and clothing industries. Based on their demand, which is basically at the weakest point of the year, new orders in the downstream will decrease. At the same time, there is an expectation that finished product inventory will continue to rise. Downstream measures will be taken to reduce the burden to prevent the risk of inventory accumulation. In addition, from the perspective of industry mentality, due to the current existence of a certain profit margin for the original hollow, downstream downstream downstream traders are becoming more bearish towards it. Even if there is an intention to buy at the bottom, they will wait for the original hollow to fall in price and then make up.


The increase in supply has intensified industry competition. From a supply side perspective, leading enterprises are currently completing maintenance in May, and there will be no maintenance plans in the short term. Another large factory currently has no maintenance plan in June, and the industry has a planned production capacity of 150000 new capacity in June. Most other manufacturers continue to maintain production load reduction, so the supply of raw hollow materials in June will have a significant increase compared to May.


The supply pressure of dual raw materials is obvious, and the cost will drag down the price of primary hollow materials. From Figure 2, it can be seen that the trend of the original hollow is relatively close to the trend of cost, and the impact of cost on it becomes increasingly prominent as profits decrease. The main raw materials for primary hollow are PTA and ethylene glycol, among which PTA, as the main raw material for primary hollow, accounts for around 80%, so its impact on primary hollow will be more significant. At present, PTA and ethylene glycol are both in a period of rising supply in June, and there is still new production capacity released in ethylene glycol. Therefore, the supply-demand contradiction in the industry will intensify, which will be negative for the original hollow cost end.