Direct-spun PSF spread exceeds 900yuan/mt

Direct-spun PSF plants focus on selling and controlling the inventory this year, so though direct-spun PSF spread has not improved much in Mar-Apr, the inventory keeps reducing.

In May, as crude oil prices slumped during the May Day holiday, and polyester feedstock market was weak after the holiday. Direct-spun PSF prices followed lower, but the price decline was smaller than polyester feedstock, so direct-spun PSF spread expanded to above 900yuan/mt.

Recently, direct-spun PSF spread continued to expand. First, it was related to the operations of controlling inventory. During the traditional peak season in Mar-Apr, the Chinese domestic demand growth slowed down obviously in 2024, so PSF plants focused on selling and inventory reduced smoothly. In May, though downstream orders are expected to weaken, PSF plants mostly have no inventory pressure, and maintain prices firm.

Second, polyester yarn sales are smooth this year, with better demand than the same period of last year. Polyester yarn and polyester/cotton yarn inventory is lower compared to last year, and spinners face less inventory pressure. Therefore, many spinning mills kept running during the May Day holiday, and only a few mills shut down for one to two days. Spinners have better continuity in purchasing PSF this year.

Third, the squeeze to recycled market. This year, price spread between virgin PSF and recycled PSF maintains low, and recycled polyester yarn sales are unsmooth, with certain deficits. So some spinners turn to purchase polyester yarn that is made of virgin PSF, promoting the demand of virgin PSF.

In general, PSF supply and demand improves this year. If polyester feedstock market turns weak after the plants that are under maintenance currently restart operation, direct-spun PSF spread is likely to expand further.