Polyester plants witness eased pressure after sales improved – ChinaTexnet.com
Home >> Textile News >> Polyester plants witness eased pressure after sales improved

Polyester plants witness eased pressure after sales improved

2019-06-12 09:19:12 CCFGroup

Operating rate of end-users declined affected by poor orders in Apr-May, and PFY and PSF plants witnessed unsmooth sales and mounting stocks, which resulted into falling price and weaker cash flow. More polyester plants scaled down or suspended production with growing pressure, and polyester feedstock price also weakened. The whole industrial chain was in downtrend.



Downstream players were more eager to go bottom fishing in end-May and during the Dragon Boat Festival with rising feedstock market and low PFY price. Sales ratio of PFY and PSF improved apparently during this two rounds, and stocks reduced dramatically.

Polyester plants witness dropping stocks
Cooperated by rising sales ratio and the production curtailment, stocks of POY, FDY and PSF slipped by more than 8 days, and the reduction of DTY inventory was around 6 days. Inventory burden has been obviously eased.

Destocking of PFY and PSF since late-May (Unit: day)
  POY FDY DTY PSF
Inventory peak in May 17 20.4 27 16.3
Current inventory 8.8 12.3 21 7.8
Reduction 8.2 8.1 6 8.5
Remark: the peak in May was near May 20-25

Price of polyester products ends falling in some plants
After destocking, price of PFY and PET bottle chip started reducing and slightly rebounded, but price of PSF kept inching down.



Cash flow of polyester products increases in some plants
Cash flow of PFY and PET bottle chip slightly improved, and PFY plants turned to be profitable instead of under losses, but PSF plants still suffered losses with reducing price.



Polymerization rate ramps up
The production suspension and curtailment of PSF and PFY plants recovered somewhat after stocks dipped and cash flow improved. The polymerization rate has increased to around 90.5% from 87.8%, and polyester plants are expected to show lower intention to cut run rate in short run. In addition, some PFY and PSF plants have presold some orders. The polymerization rate is expected to be supportive to upstream feedstock market in short term.



Run rate is supported by increasing replenishment of end-users, and orders are sparse
According to the research on downstream industry, downstream market was still in slack season. The stocks of finished goods were not under downtrend, and players lowered run rate to slow down the accumulation speed. Orders improved sporadically after PFY price firmed up, but overall weakness did not change, supporting the run rate of twisting units and fabric manufacturing plants in Zhejiang and Jiangsu limitedly. Intensified Sino-US trade conflict rendered downstream plants purchasing cautiously, and such situation is not expected to change in short run. You can get more information about the downstream market from the Operation report of fabric mills in Zhejiang and Jiangsu

However, feedstock price was low and players showed apparently mitigated mindset, with strong bargain-hunting mood; thus, the restocking of end-users prominently grew. By now, the feedstock prepared in downstream plants was mainly around 10-15 days, loner around 1 month. Generally, the replenishing of downstream plants in Jun has improved obviously compared with Apr and May. Polyester plants witnessed decreasing stocks not only benefiting from the control of own run rate. Actually, the inventory was transferred to downstream market, partially to traders.

Continuous weak downstream demand and low price of the whole industrial chain renders market players showing better anticipation toward market outlook. Stocks of feedstock and finished goods are supposed to be both high in short run, and the run rate may rise. Eyes are suggested to the order improvement level, the appearance of destocking and the increment change of run rate in polyester plants and end-users.

In short run, price of PFY may stop falling and stabilize with eased inventory burden, and sales under losses may not appear temporarily. But the rebounding tendency should be cooperated by surging feedstock or continuously positive feedback of downstream procurement.

Keywords: