Destocking on downstream sector urgent for high polyester polymerization rate

In early-Aug, the disturbance from feedstock market appears frequently on polyester market, while the operating rate is high compared with the same dull season of past years, with the run rate of polyester plants at 92.5%, DTY producers at 77%, polyester yarn mills at 61% and fabric mills at 68%. The summer power rationing was supposed to affect operation, but it has not emerged temporarily. Downstream players are preparing inventory in expectation of demand in peak season. Sales of fabrics for autumn and winter apparels such as circular knitted dralon fabric, warp-knitted velvet fabric and water-jet high-density polyester pongee improve recently.

High operating rate during the off-season is mainly stimulated by the export of PFY and PSF and the accumulation of inventory burden on the whole value chain.

By convention, stocks of grey fabrics will start falling in Aug-Sep. By now, the inventory burden in PSF and PFY plants is controllable temporarily. The stocks of PSF are below half a month and those of POY and FDY are above 15 days. As for the inventory structure of the value chain, the inventory pressure of PFY sector is mainly in DTY and downstream grey fabric sectors, averaged above 30 days. The inventory burden of PSF field is mainly in downstream spinners, above 30 days too.

Currently, the stocks of DTY, polyester yarn and grey fabric keep refreshing yearly high, not showing signals to reduce for the time being.

Players worry the sustainability of high polyester polymerization rate. Actually, it is the worry of destocking on downstream market. The performance of downstream market in Aug-Sep is especially crucial. If demand is worse than anticipated in peak season, the pressure is expected to be transferred to upstream sector.