PFY price enjoys support amid ascending downstream run rate –
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PFY price enjoys support amid ascending downstream run rate

2020-08-12 08:59:18 CCFGroup

Operating rate of downstream fabric mills and twisting units gradually ascended since late-Jul, which was at 70% and 79% respectively now, with earlier high at 72% and 79% respectively.

Warp knitting plants in Haining took a lead in destocking and ramping up run rate, followed by circular knitting plants in Xiaoshan and Shaoxing, warp knitting plants in Changshu and water-jet units in Changxing. However, water-jet plants in Wujiang and North Jiangsu witnessed weak performance, which was the weak link on downstream market in recent period.

Stocks of grey fabric reduced as rising PFY price stimulated some textile and apparel companies to restock, which was the major reason for the recent raise of run rate in fabric mills and twisting units.

Feedstock inventory of downstream plants increased again with higher PFY price and better sales compared with last month.

Polyester market is still expected to enjoy support from demand side in short run as water-jet market is anticipated to improve. As for feedstock market, supply pressure is supposed to be modest in short run amid the launch of new units and plants’ turnaround. Polyester enterprises, especially fiber sector, may sustain current run rate with falling stocks. New units in Aug include 250kt/year of PET bottle chip from Yisheng Hainan, 300kt/year of PFY from Tongkun Hengchao and around 200kt/year from Hengli (not confirmed temporarily). Support from polyester sector to the demand for PTA and MEG market is moderate.

Among polyester products, PET bottle chip market may be sluggish in short run and fiber link is expected to be relatively stronger. Cash flow of PFY companies is still during negative territory, and it is the best time to compensate loss with reducing inventory. However, PET bottle chip market is during off-season, hard to move consistent with the whole industrial chain, which is anticipated to be sluggish temporarily. The temporary units change in PET bottle chip plants should be alert in short term. In view of the timing, demand reacts in advance in Aug, and the durability of fiber demand is anticipated to be not strong in later period. Downstream buyers are suggested to be cautious in preparing feedstock for the production after Sep, especially late-Sep.