PFY inventory may start falling after downstream operating rate spikes

The recovery of downstream plants was slow after the Spring Festival holiday as the cold and rainy weather affected the return of workers at first but accelerated after the Lantern Festival (Feb 24) with better weather. The operating rate of DTY plants, fabric mills and printing and dyeing plants spiked, which has been high by this week.

Operating rate of DTY plants advanced to 91%in Zhejiang and Jiangsu by Mar 7: near 90% in Xiaoshan, Shaoxing, Cixi, Changxing, Taicang and Changshu. Operating rate of fabric mills rose to 80% in Zhejiang and Jiangsu: above 90% for water-jet mills in Wujiang, near 90% in North Jiangsu and Changxing; the run rate of warp knitting plants was near 90% in Haining and around 80% in Changshu. The run rate of circular knitting plants in Xiaoshan and Shaoxing from Zhejiang was below 40% and was at 30-40% in Changshu, Jiangsu. Operating rate of printing and dyeing plants ascended to 82% in Zhejiang and Jiangsu: around 80% in Wujiang, Xiaoshan and Shaoxing, above 90% in North Jiangsu and Changxing, at 70-80% in Haining and around 70% in Changshu.

The highest operating rate of DTY plants, fabric mills and printing and dyeing plants was near 92%, 85% and 85% respectively in 2023, and current run rate of downstream plants has been near this level. Whether it will increase further largely depends on the circular knitting market in Xiaoshan and Shaoxing from Zhejiang.

Sales of grey fabrics were divided. Sales and orders for warp-knitted and water-jet fabric were better than those of circular-knitted one. Among circular knitted fabrics, sales of single-faced fabrics were relatively better and those of double-faced fabrics and terry fabrics were weak. Domestic and export sales both existed, while the export orders were slightly better than anticipated in some factories. The comprehensive atmosphere of downstream market is sound, which will support high operation rate in Mar.

The inventory of PFY is still accumulating but the PFY stocks of downstream plants are falling rapidly. Some PFY plants have seen eased inventory. The comprehensive inventory of PFY in PFY plants and downstream factories has started reducing.

Meanwhile, cash flow of PFY plants increased in Mar when the price of PFY was firmer than that of feedstock.

The cash flow of PFY plants has been high and the inventory is likely to start reducing, which will support high operating rate. By now, the comprehensive operating rate of PFY plants has increased to 83.5%. The operating rate of direct-spun plants has ascended to 91.4% and may exceed 92% after Xianglu and Hengli's units resume operation (with total capacity at 320kt/year) and the run rate of some plants is recovering further.