Polyester market experiences a difficult start in October amid turmoil overseas market

During the Mid-Autumn Festival and National Day holidays (Sep 29-Oct 6), while domestic tourism was booming, overseas markets experienced a roller-coaster ride. Federal Reserve Chairman Powell's hawkish speech led the market to believe that the Fed could raise interest rates to 7%, and it is no longer in doubt that the long-term US Treasury yield has broken 5%. The US dollar index soared past 107, reaching a new rebound high. Except for the strong US dollar, all assets including US stocks, US bonds, Chinese tech companies, and the Japanese yen declined together. The most severely affected were gold and silver, which plummeted back to the lows of the beginning of the year, erasing the gains triggered by the US Silicon Valley bank crisis earlier in 2023.

At the same time, oil prices, which were sprinting towards the $100 mark not long ago, also suffered a blow.

Despite statements from Saudi Arabia and Russia, indicating their commitment to voluntary oil production cuts until the end of the year to maintain market stability, crude oil futures still experienced a significant decline. This could be partially attributed to the strength of the US dollar and profit-taking by investors. Additionally, the potential negative impact of longer high interest rates maintained by European and American countries on oil prices, together with the bearish news of US petroleum consumption peaking and declining conveyed by the EIA's monthly report, marked the beginning of the oil price sell-off.

CFR PX price also decreased on Oct 6 compared with Sep 28.

Polyester market presented quiet during the long holiday. Most companies held price stable and only some cut price, while there were almost no transactions. Downstream players focused on consuming raw materials prepared before holiday and polyester companies saw bleak sales. Downstream grey fabric market also experienced similar status. Many fabric mills reflected modest sales during holiday, and some said new orders or sales were very scant. Falling crude oil price also rendered downstream fabric mills, DTY plants and fabric traders to be more cautious. In short run, affected by reducing price of crude oil and PX during holiday, price of PTA and polyester products may head south after holiday.

Just as mentioned before, by convention, downstream orders will embrace the best performance in early-Oct and demand is likely to start weakening at least after late-Oct, even into end-Oct in some years. Demand during this peak season starts in advance and whether it will stop in advance too remains uncertain, not ruling out demand to improve once after the long holiday. Based on current status, the first week of October has passed while downstream players still saw mediocre business and there are no signs to recover again, which may be because the plunging overseas market impacting downstream buyers' procurement tempo. Whether downstream players can catch the tail of peak season will be very crucial in the next 1-2 weeks. If it is missed, there will be no big expectation later.