In early September, the prices of products in the polyester industry chain continued to fall, the spot prices of PTA and PX hit a three-year low, and the price of polyester bottles fell below the new low in the year. This is partly due to the continued decline in crude oil prices in early September, but also due to a lack of confidence in the market.

But now, market confidence is gradually recovering, polyester raw materials seem to show a trend of bottoming out.

Increasingly cautious markets

Unlike the active weaving market in the first half of the year, the market sentiment in early September appeared somewhat cautious.

As the beginning of the traditional "gold nine silver ten" season, market orders did not pour in as in previous years, and the number of orders increased slightly compared with the first half of the year.

However, this is not due to lack of market demand. China is the world's largest exporter of textiles and apparel, accounting for 33.7% of the global export market, according to data released by the China Textile Import and Export Chamber of Commerce. From January to August this year, China's textile and apparel exports totaled $197.77 billion, up 1.1% year-on-year. Although the growth rate of demand has slowed down due to the global economic situation, it is still in the growth stage. In addition, the achievements of the "Belt and Road" Initiative have gradually emerged, and the development of emerging markets has also achieved relatively obvious results in recent years.

Just ahead of the US Federal Reserve's rate-cutting cycle, global monetary tightening has been accompanied by a sustained fall in commodity prices, notably crude oil, leading to a lack of confidence in markets and traders being cautious about hedging orders. That, too, is changing.

Is the bottom coming?

From a macroeconomic point of view, the Federal Reserve raises interest rates to shrink monetary liquidity, and lowers interest rates to release monetary liquidity. According to CCTV news, after a two-day monetary policy meeting, the Federal Reserve announced on September 18 local time that the target range of the federal funds rate was lowered by 50 basis points to 4.75% to 5.00%. This is the Fed's first rate cut since March 2020, and it also marks a shift in monetary policy from a tightening cycle to an easing cycle. By then, market liquidity will be gradually released, and the situation may improve.

From the perspective of polyester raw materials, in the market in early September, a variety of polyester raw materials appeared significantly oversold. Although the fundamentals of some polyester products are weak at present, the low price is difficult to sustain. After falling raw material prices, the bottom has become very firm.

From the perspective of weaving enterprises, the main problem in the current downstream market is a cautious attitude and a lack of confidence. However, demand can be delayed, but it is hard to really go away. As the weaving rate continues to rise, at least the next two months will be the peak of shipments and orders, and the use of raw materials will also have rigid demand. However, since September, the price of polyester raw materials starting from crude oil has continued to fall, so that weaving enterprises dare not stock up and dare not buy silk halfway up the mountain. Once the bottom of the market judgment appears, there will be a larger market trend, and this has proved to be the case.

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