PSF plant operating rate falls to one-year low of below 70%

The operating rate of direct-spun PSF has fallen quickly since Mar and hit the low in the past year at 69.2% by Apr 2.

Why?

1. Much low PSF spread

PSF spread kept moving down from early this year and especially in Mar, it was contracted to 700yuan/mt from just over 1000yuan/mt. Thus some direct-spun PSF plants were forced to cut or suspend production from mid-Mar by the great losses. As the low-priced raw materials are used up, more plants join the queue of the production curtailment, as well as some plants producing HC virgin PSF and low-melting PSF.

2. Demand and logistics affected negatively by Covid-19 pandemic

In Mar, the pandemic broke out in many regions in China, and then the logistics was hindered. As a result, some plants held high inventory to be delivered while some plants faced short supply of raw materials. Besides, as the pandemic escalated, terminal fabric mills or printing and dyeing plants increasingly shut down, further dragging down the demand. The inventory of direct-spun PSF plants hiked.

Now, direct-spun PSF market also depends on downstream demand. It will be hard to improve if the demand side stays soft. In mid- to late Apr, when the control to the pandemic lasts half a month, the market may be worth being anticipated.