Why doesn’t expected intensive restocking of direct-spun PSF come yet?

Along with the sharp rise and fall of crude oil, direct-spun PSF also fluctuated intensely after Spring Festival, which triggered the look-on mood of market participants. And the originally expected downstream restocking has not come yet. What happened to downstream market?

1. Volatile crude oil and polyester feedstock force market participants to the sidelines.

During Spring Festival holiday, crude oil surged, so direct-spun PSF plants successively adjusted up their prices when the holiday finished. However, there were no buyers as downstream plants were still in suspension. Subsequently, the changeable situation of Russia and Ukraine dragged down crude oil, as well as polyester feedstock and direct-spun PSF. Facing the volatility, downstream plants focused on consuming pre-holiday raw materials stocks. Those having limited stocks just purchased based on their immediate demand.

2. Quick recovery of operating rate of direct-spun PSF plants, while slow one of downstream orders.

Direct-spun PSF plants successively raised the temperature of the units and restarted right after the holiday. By late Feb, the run rate has improved to about 85%, a high level since “dual control” on energy consumption. It may further increase later and reach 88% or around in early Mar.

Downstream yarn spinners resumed production actively at first. As the orders stayed stagnant and the inventory accumulated, the resumption slowed down.

3. The orders of apparel return and PSF export is expected to recover

Since the fourth quarter of 2021, the orders which had flowed to China from Southeast Asia started to return gradually, and the apparel export of China stagnated and even slid.

Even so, textile export still shows healthy momentum. Overseas orders for apparel increased, which will be favorable to PSF export.

Therefore, although upstream market recovers more quickly than downstream and the orders of end-user demand also exert additional pressure, the spring for direct-spun PSF will finally arrive.