China's PFY exports hard to be optimistic in Q4 2022

According to the latest data from China customs, exports of PFY were at 240kt in Sep, 2022, down by 5.88% on the month and up 24.52% on the year, declining for three months in a row. The total PFY exports were at 2413.3kt in Jan-Sep, 2022, up 6.55% on annual basis.  PFY exports decreased by 24.2% on the year in Q3 2022 with low volume in the same period of last year but will apparently fall in Q4, not ruling out to see negative growth. PFY exports are estimated to witness around 5.11% of growth rate throughout 2022.

Exports of PFY in Sep have reduced to the level in Apr when the spread of pandemic was serious in local China. It incarnated PFY exports were confronting big challenge. On one hand, overseas demand was weakening; on the other hand, the price war gradually became ineffective amid high inventory. Exports failed to show signals to improve even in late-Oct. Market players hope overseas buyers will replenish based on the conventional tempo in end-2022 (Nov-Dec) like past years.

Among specific varieties, FDY was the only specification witnessing positive growth in Sep. India contributed a lot to the increase. Exports of FDY may see positive growth throughout 2022. The growth rate of DTY export was astonishing but may be slower throughout 2022 as export has lacked momentum in recent three months. POY exports bound to face negative growth throughout 2022 and the reduction is likely to expand later.

Exports of PFY to India and Pakistan apparently advanced in Sep, while those to Brazil, Egypt and Mexico obviously decreased.

Impacted by the flood and insufficient foreign exchange reserves, PFY exports to Pakistan hit yearly low in Aug and recovered in Sep when the mentioned problems were mitigated. On Oct 21, 2022, the Asian Development Bank has approved a loan of US$1.5 billion to the Pakistani government, which can significantly alleviate its foreign exchange shortage. The subsequent demand for China-made PFY to Pakistan is worth looking forward to.

Egypt still faces the plight of insufficient foreign exchange reserves. Since Sep 8, the Egyptian Ministry of Finance has raised the price of customs dollars to 19.31 Egyptian pounds. This new customs dollar exchange rate has reached a record high, making importers' import costs continue to rise, curbing Egypt's domestic import demand to a certain extent. However, IMF said a few days ago that it was close to reaching an agreement to provide new loans to Egypt. At that time, it can alleviate the shortage of foreign exchange reserves. Exports of PFY to Egypt have increased in Oct while the later movement should be observed further.

Mexico's import volume of China-made PFY dropped significantly in Sep due to anti-dumping problems. It was learned from traders that anti-dumping measures in this region have been implemented, but no clear standards have been published, resulting into market confusion. Enterprises were advised to be cautious about orders exported to Mexico.

On the whole, although the shortage of foreign exchange in some countries has been alleviated and the import demand for China-made PFY has recovered, there is still a significant decline in demand in some countries due to problems such as anti-dumping and weak orders. China's PFY exports may be hard to increase in Oct, temporarily estimated at around 230kt.

Remark: the freight of different ships and forwarders differs, and the above freight is only for reference.

In Oct, shipping companies reduced some voyages and superimposed an increase in local cargo volume, which led to a rise in freight rates on some routes after the National Day holiday, mainly the Middle East, the Red Sea and some South America routes. The freight rates began to diverge obviously: most fell and some increased. In the context of weak demand, shipping companies may cancel more voyages before the end of the year to support freight rates, but many market players believe that the freight increase is unsustainable and there is still downward pressure after increased periodically.

The freight from Ningbo port to Egypt/SOK was at US$3,000/40HQ, which was at US$1600/40HQ before the National Day holiday, that to Pakistan/Karachi slightly rose to US$1,200-1,300/40HQ, that to Bangladesh/Chittagong was near US$1400-1500/40HQ, and that to Indonesia/ Jakarta was around US$950/40HQ.