China's PFY exports grow more than anticipated

According to the latest data from China customs, exports of PFY were at 314kt in Nov, 2022, close to the peak in Jun, up by 21.4% on the month and 22.4% on the year respectively. The total PFY exports were at 2986kt in Jan-Nov, 2022, up 9.1% on annual basis.  

Some market players doubted the export data in Nov. The export of PFY is expected to be high in Nov and Dec but it is unexpectedly to be so high. Higher-than-anticipated export volume was stimulated by the delivery of earlier orders and the replenishment of overseas customers at the end of year driven by low price.

Exports of POY outperformed in Nov, hitting yearly high and witnessing positive growth rate. Exports of POY, FDY and DTY were all better than last year.

Exports of PFY were mainly to Egypt, India, Turkey and Pakistan in Nov, with export volume to these four nations accounting for 49.2% of the total.

There has been foreign exchange risk in Egypt since Aug, and it is difficult for the buyer to exchange foreign exchange with the bank in the short term, resulting in the inability to pay and pick up the goods in time after the goods arrived at the port. Some buyers have proposed to extend the payment period and release the goods in advance, and the risk of default in buying a house has also increased significantly. The buyer's payment situation improved significantly in Nov, and the freight rate of the Red Sea route was being hyped at that time, leading to an intensive order placement.

Pakistan's demand for PFY continued to recover after the floods, and during Pakistani Prime Minister Shabaz's visit to China, China promised to suspend the repayment of $4 billion in loans from Pakistan, refinance more than $3 billion in commercial loans, and expand local currency swaps to $1.45 billion, further boosting the PFY trade between China and Pakistan.

India and Turkey was still due to the reason mentioned earlier. Starting from January 2023, exports from India to the European Union will impose a general import tariff of 6.5%. Before the tax begins, India wants to deliver as many orders as possible; after the GSP treatment of India is abolished by the European Union, part of the demand is bound to be diverted, and Turkey is a very good transit place in terms of all conditions, and the Turkish market is worthy of attention next year.

The freight of major routes declined in Nov and was largely stable in Dec. The freight from Ningbo port to Egypt/SOK slumped to near US$1900-2000/40HQ, which was at around US$2600/40HQ in early-Dec, that to Pakistan/Karachi was around US$700-800/40HQ, flatting with early-Dec, and that to Indonesia/Jakarta was at US$400-450/40HQ, slightly increasing over early-Dec.

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

At present, shipping companies continued to cut capacity, especially in the transpacific, transatlantic and major trade routes from Asia to northern Europe and the Mediterranean, while shipping companies plan to cancel a large number of scheduled voyages from Asia to northern Europe and the United States after the Spring Festival. However, from the freight forwarder feedback, the role of reducing routes has become more and more limited, which can only ensure a stable freight rate in short run or narrowed the decrement, a complete lack of upward stimulus.

Reflected by the market players, export orders for PFY of Dec is expected to slightly decline over Nov, which may be around 300kt/year, lower than the 314kt in Nov. PFY exports are expected to grow by around 9.6% throughout 2022.