Overstock of up to one million tons of polyester companies use derivatives to take risks

Overstock of up to one million tons of polyester companies use derivatives to take risks

Our reporter Wang Ning

Affected by the epidemic, all industrial chains are facing difficulties to varying degrees. A few days ago, a reporter from "Securities Daily" interviewed a number of enterprises and learned that the polyester industry chain is experiencing the coldest "cold winter" in recent years. Difficulties in resuming work, poor logistics, backlog of inventory, and inconvenient capital turnover are all in the process. Enterprises continue to "pressure"; in February, the overall inventory of the PTA industry was backlogged up to one million tons, and most companies face difficulties in production and operation. However, companies that borrow derivatives for risk management are relatively optimistic.

Xu Jien, deputy general manager of the PTA sales center of Yisheng Petrochemical, told the Securities Daily that during the epidemic period, companies that used futures for hedging basically solved the problems at the sales end and effectively eliminated the risk of high inventory. "The company uses derivatives for risk management, and through strategies such as selling hedging, processing fee hedging, and arbitrage, it effectively solves the risks of inventory accumulation, rising costs, and fluctuations in basis spreads."

Factors such as poor logistics, backlog of inventory, and unrecoverable funds have become difficult problems for the polyester industry during the epidemic. In response to these issues, an interview with the Securities Daily reporter learned that, except for Hubei Province, the production of enterprises only reached an inflection point in mid-late February. Even so, the operating rate of the polyester industry was still less than 60%.

"During the epidemic, the most affected area is logistics. The logistics problem mainly lies in the" people "side." Xu Jien told reporters that although the current logistics problem has been basically solved and there is no problem of difficult transportation in the country's roads, the work resumes. May have some impact. The difficulties faced by enterprises in the first two months of this year have been relatively obvious. Among them, inventory accumulation is also an important problem.

It is understood that, because the traditional Chinese New Year is a low season for the polyester industry, manufacturers generally stock up during the Spring Festival and sell it after the holiday. However, due to epidemic factors this year, upstream manufacturers have higher inventory, especially in February. However, downstream enterprises could not resume work after the Spring Festival, and the entire industrial chain could not buy raw materials, resulting in no stock in the downstream. At the same time, upstream and downstream industry-end inventory contradictions have led to a shortage of cash flows, and funding problems have finally become a major problem that plagues enterprises.

"Under normal circumstances, PTA and polyester factories are continuously producing. Enterprises will lose several million yuan in one stop. Therefore, under normal circumstances, they will maintain load production." Xu Jien said that under the influence of the epidemic, PTA enterprises Although sales have been partially affected, due to the advantages of several large domestic PTA manufacturers relying on the integration of upstream and downstream integration from oil refining to polyester production, the operating rate of the PTA industry in February has not changed much. It is precisely because of this factor that high The accumulation of inventory performance is more obvious after the Spring Festival.

He said that according to the maintenance and load reduction in February, the overall output of the polyester industry in the month was about 3.6 million tons, so the pressure of PTA supply and demand accumulation warehouses increased sharply, and the accumulation of warehouses in a single month expanded to around 1 million tons, creating a single unit. Yuelei library has a record high.

At the same time, Xu Jien also said that the downstream end also showed a very optimistic situation, specifically: First, the weaving company's operating rate was as low as freezing point; Second, the weaving company's procurement enthusiasm was low; Third, the polyester product inventory hit a record high; The polyester load hit a record low. In addition, the PTA social inventory also hit a record high. The PTA load fluctuated greatly following processing fees, which ultimately led to a large decline in the price of PTA finished products.

Many companies in the PTA industry chain were almost unexpected about the outbreak of the epidemic, and they faced greater pressure on uncertainty. Some companies formulated their own business strategies to weather the crisis based on internal and external environments.

Some industry sources said that in addition to paying attention to policies, output adjustment, inventory optimization, reducing operating costs and capital flow, the polyester industry chain companies also turned their attention to the futures market to find diversified solutions. PTA companies, polyester factories, and related traders use futures hedging and use futures derivatives such as processing fee hedging and risk-free arbitrage to solve problems such as falling prices and high inventory.

It is understood that Yisheng Petrochemical is one of the companies that use derivatives to achieve risk management. By formulating multiple hedging plans, the company has achieved good results in digesting inventory, reducing costs, and locking in revenue.

"For the impact of the epidemic and the collapse of crude oil, the company hedged and established positions on PTA futures in advance." Xu Jien said, first of all, hedging of commodity prices, the company chooses to establish corresponding short orders on futures, Lock the PTA selling price. When selling goods at a point price in the future, you only need to complete the transaction according to the reasonable premiums and discounts in the market. This will turn the risk of absolute price fluctuations into the risk of basis differences, which greatly reduces the price fluctuation band. Risk of inventory depreciation. (Securities Daily)