Crude oil premium disappears
In March and April, due to geopolitical conflicts, there was a risk premium of approximately US$10 in international oil prices. Some institutions even predicted that crude oil prices would hit US$100, which also led to continued price increases for polyester raw materials. But after entering May, the crude oil risk premium declined.
During the U.S. trading session on Tuesday (May 1), WTI crude oil fell more than 3%. Oil prices extended losses as traders awaited a Federal Reserve interest rate decision as U.S. crude inventories rose to their highest level since June. And hopes for a ceasefire in the Middle East have cut into the commodity's risk premium. WTI crude oil and Brent crude oil fell below US$80 and US$84/barrel respectively, which was the first time since mid-March.
Of course, the geopolitical situation is changing rapidly and may reverse at any time. On April 20, local time, the U.S. House of Representatives voted to pass a foreign aid bill worth $95 billion. The bill includes more than $60 billion in aid to Ukraine, more than $26 billion in aid to Israel, and more than $8 billion in aid to "Indo-Pacific security."
When crude oil prices fall and polyester raw materials are at low levels, it may be a window period for weaving companies to purchase raw materials.
The textile market is divided
Although the overall performance of the textile market in March and April was good, after entering late April, the market gradually began to differentiate.
Some downstream weaving mills, fabrics, printing and dyeing companies are constantly receiving orders, and the orders can be scheduled for two months later. Because the order reception situation is good, they have begun to expand production capacity, resulting in loom factories also receiving continuous orders. Some textile companies reported that the machines purchased in January were originally scheduled to arrive in February, but in the end they only arrived halfway through February, and some of them were still missing spare parts. Some downstream weaving mills, fabric and clothing companies are bearish on the recent market. Some textile companies in Shandong, Anhui, Hubei and other places plan to extend the May Day holiday and postpone the resumption of work.
A textile company in Dangshan, Anhui Province said that the cotton textile and apparel industry is about to enter the traditional off-season. In March 2024, textile and apparel exports dropped by more than 20% year-on-year. The volume of imported yarn has continued to increase significantly and impacted domestic yarn. The company plans to take a 10-day May Day holiday.
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After the "Gold, Three, Silver and Four", the textile market is becoming differentiated
