Will re-PSF market move up further under "dual control"?

Close virgin PSF plants in Jiangsu province are impacted a lot by the intensified electricity curbs. A few plants in North Jiangsu suspended operation from Sep 19 to Sep 21, and restarted on Sep 22, but were closed again on Sep 24. In Yizheng, part of plants cut production. In Jiangyin, some plants were closed immediately and some cut production. In Wujiang, operating rate ran at 50%. In Guangdong, HC re-PSF plants were also impacted by the electricity curbs. Some plants were required to run for three days and close for four days, or run for one day and close for six days.

Market players pay attention to the price of re-PSF and how about the late market?

Recently, some HC re-PSF plants raised the offers by 100yuan/mt, partly up by 200yuan/mt, mainly attributed to lower supply and rebound of oil and polyester markets. Trading sentiment was active, and sales diverged. Sales ratio of some plants could reach 200%, while some was below 100%. For close virgin PSF, only a few plants in Hebei raised the prices, and prices in other regions held flat mostly. Therefore, this round of rise was mainly from the supply side, but not the demand side. The continuity is not confirmed.

Focus on the relative factors:

1. For PTA market in Oct, the anticipation changes from de-stocking to inventory accumulating. Affected by the dual control policy and unexpected unit maintenance, the intensive maintenance plan in Oct comes earlier in Sep. Then, PTA inventory may rise by 200kt in Oct. So the market may be not firm as expected previously and virgin polyester market may be range-bound.

2. Price spread between re-PSF and virgin PSF remains above 1,000yuan/mt. Virgin PSF prices have limited downward space, and with firmer feedstock, lower virgin PSF prices may keep upward. Currently, re-PSF inventory is not high overall, and some plants with lower inventory and their customers not affected much by the dual control policy intend to raise the prices. Plants with high inventory maintain the prices.

3. Others: recently, prices of auxiliary additives, such as silicone oil and titanium dioxide, increase obviously, and with the losses caused by production shut or production cut, the production costs move up overall, which restraining the downward space of prices.

Therefore, recycled market may remain stable to firm, and pay attention to the dual control development on energy consumption.