Why can polyester FDY outperform than POY?

The profit of polyester FDY plants is better than that of POY this year. Meanwhile, sales of FDY are slightly better recently. The inventory burden of FDY in mainstream producers is lower than that of POY and DTY.

On one hand, the summer fabric of chemical fiber clothing pays more attention to the drape effect, especially the female fashion products. Silk-like FDY products are more widely used in summer clothing fabrics than DTY, which has a more cotton feel, especially in the raw materials of woven fabrics.

On the other hand, among the textile filament, the effective capacity increase of FDY is much smaller than that of POY in recent years. In Jan-Apr, 2023, new textile filament capacity was at 2.51 million tons/year, and the proportion of FDY was only around 21%, far lower than 32% in end-2022. In recent decade, the proportion of effective capacity of FDY is falling year by year. In 2022, 800kt/year of FDY capacity was eliminated in Tiansheng, a top FDY producer.

The supply and demand of FDY is seasonally moderate, while POY-DTY chain faces prominent pressure from supply and demand. DTY is under low price competition. For example, price of DTY75/72 light intermingled in large factories is lower than that in small producers recently.

Since Q4 2022, the price spread of FDY and DTY has been narrowed to be low. The gap of 150D series has been squeezed to below 750yuan/mt and that of 75D is reduced to below 1500yuan/mt.

In addition, demand for elastic fabrics has been good in recent two years. Demand for PET two-component fiber grows much in 2023, mainly covering FDY, which also stimulates demand for FDY.

As for the later launch of direct-spun textile filament in 2023, most will come from POY. FDY market is expected to witness relatively better profit and inventory than POY in medium-to-short run. However, after the production season of autumn and winter products starts, the demand for DTY may be bolstered. The price spread of DTY-FDY is likely to slightly increase.