PFY: cash flow recovers after end-user demand exceeds expectation

Recently, the support from domestic sales and export hit market expectation on PFY market. On one hand, PFY exports were at 272.8kt, down by 26.16% on the month. Reflected by PFY producers, exports increase in Nov. Some mainstream large companies witness apparently growing export orders. On the other hand, the operation rate of DTY plants, fabric mills and printing and dyeing plants ascends to 89%, 85% and 83% respectively now.

On fabric manufacturing sector, better-than-expected sales of winter products supported market.

Sales of some knitted fabrics and lining fabrics for apparels improved, including velvet fabrics, super-soft fabrics, dralon fabrics, fur-like fabrics, woven warp-knitted high-density polyester pongee and warp-knitted flannel fabrics for home textiles. Sales of water-jet fleece fabrics are modest while does not drag down market much. Sales of fine denier PFY and high F filament are sound now.

Players hold weak anticipation toward winter products as the temperature was high in Oct. Some downstream plants cut run rate in end-Oct and early-Nov. After the temperature suddenly turned colder in mid-Nov, the stocks of winter fabrics rapidly decreased, and factories were forced to raise run rate to increase production.

With sound sales of fabrics, fabric mills see high operating rate and reducing inventory, which supports the run rate of DTY producers and POY/FDY factories. POY/FDY factories are unlikely to apparently slash run rate in Dec. In addition, the operating rate of printing and dyeing plants and fabric mills is also high now. Prices of grey fabrics increase and the profit also recovers. The cash flow of most grey fabric varieties has hit the yearly highest now.

PFY and downstream sectors face strong reality and weak expectation now. The seasonal demand exceeds expectation. The reduction of operating rate may be retarded.