How direct-spun PSF steps out of the weakness

Since mid-Apr, direct-spun PSF price has rebounded with PSF spread rising. PSF is stepping out of previous weakness.

Behind the improvement is PSF plants’ efforts.

Firstly, lower operating rate.

Market demand was weakened from Mar by the pandemic, and with supply surplus, PSF spread was contracted to 600-700yuan/mt. Under the great losses, PSF plants cut or suspended production, and by mid-Apr, the operating rate declined to 61.5% from 87%. As operating rate declined, the inventory accumulation was mitigated. Especially from Apr, direct-spun PSF for spinning was destocked slightly amid downstream replenishment.

Secondly, squeeze the inventory of intermediate link.

Before mid-Apr, direct-spun PSF moved with a weak note and the trades by basis showed obvious advantage. PSF plants could not provide sources with lower prices under the losses, so the traders sold smoothly and their stocks kept reducing. Later on, the logistics was hindered in Jiangsu due to the pandemic. PSF plants put priority on downstream spinners’ demand and reduced the supply to traders.

Thirdly, persist in prices.

At present, PSF stocks in intermediate link and spinners were low and most of them were concentrated in PSF plants, so the plants had louder voice of pricing. Along with the rise of crude oil, PSF plants are strongly willing to raise prices. Currently, semi-dull 1.4D is mostly offered at 8,100-8,200yuan/mt and the trades are following up.

Despite dull daily sales ratio, direct-spun PSF is gradually getting rid of previous weakness amid expected improvement of demand as the control on logistics is eased gradually. The plants still need to keep conscious to consolidate current achievement.