China's October PFY exports hit yearly low and may rise in November-December

According to the latest data from China customs, PFY exports were at 273kt in Oct 2023, down by 26% or 97kt on the month, hitting the yearly low. Exports to India only approached 9kt, down by 74kt or 89.3% over last month. PFY exports amounted to 3380kt in Jan-Oct, 2023, a year-on-year rise of 26.5%.

Falling PFY exports in Oct were in line with market expectation. On one hand, the raw material inventory of Indian customers can mainly guarantee production until Q1 2024. The PFY export trade has been in stagnation after the BIS certification is implemented. On the other hand, due to poor demand in the traditional shipping season, several container transportation giants early announced a large-scaled reduction plan starting from the National Day to stabilize freight rates, forcing some orders originally scheduled for Oct delivery to be delivered in Sep, and some new orders received in Oct were also delayed due to high freight rates and other reasons.

DTY export orders improved since Nov and may rise to above 300kt coupled with the delivery of some orders placed before. By convention, many overseas customers need to replenish at the end of year but it may be disrupted by the fluctuation of RMB exchange rate and has uncertainty. PFY exports are still estimated to be high in Nov and are still anticipated to be 4 million tons throughout 2023, a year-on-year increase of 21%.

Exports of POY and FDY decreased to yearly low in Oct, down by 55kt and 27kt on the month respectively. Among this, exports of POY and FDY to India fell by 46kt and 25kt respectively. Reducing DTY exports were mainly attributed to Brazil, Pakistan and Egypt.

The situation in the Indian market has been mentioned before, and it will not repeat here. Although the mainstream factories in China have not passed the BIS certification, most players hold optimistic mindset, waiting to see whether there will be a better change in 2024.

The Egyptian market should be the biggest surprise in Oct. As the Israeli-Palestinian conflict further increased domestic economic risks, the Bank of Egypt even imposed foreign currency restrictions on bank cards linked to local bank accounts in mid-Oct to ease the foreign exchange crunch in North African countries due to the difficulties of economic growth. The volume of cargo going to Egypt was small in Nov, with freight rates of some routes falling by more than 20%.

Flooding caused by continuous torrential rains in southern Brazil led to a periodic suspension of shipments on some routes in Oct, resulting in a certain decline in export volume, but with the gradual weakening of the impact of the flooding, maritime transport has recovered significantly in mid-Nov. Some large manufacturers also sold large orders to Brazil in Nov, and the PFY exports to Brazil is expected to pick up significantly later.

In addition, on Sep 19, 2023, Pakistan terminated the anti-dumping measures on China-related polyester filament yarns. The previous anti-dumping duty on China was 2.78%-6.82%, but according to market feedback, the previous anti-dumping measures did not have much impact. Domestic enterprises are shipping normally. On Nov 1, 2023, Vietnam lowered anti-dumping duties on some enterprises, and the tax rate on Chinese products involved in the case was reduced from 3.36%-17.45% to 3.24%-17.45%.

In Oct, due to the large-scaled voyage reduction of shipping companies, there was a significant increase in spot freight rates, but with the gradual decline in shipments, it was difficult to maintain the high freight rates since late-Oct and entered the downward channel again in Nov.

The freight from Ningbo to Egypt/SOK was at US$1300/40HQ in early-Oct and once rose to US$1850/40HQ but fell to US$1350/40HQ later. The freight from Ningbo to Pakistan/Karachi was around US$1000/40HQ in early-Oct, surged to around US$1250/40HQ and reduced to US$950/40HQ. Impacted by the flood, the freight from Ningbo to Brazil/NAV rose to US$2500/40HQ and players gave up the high freight under 40HQ after transportation recovered and turned to US$1700-1900/40NOR.