Recycling plants’ operation status after Spring Festival holiday

After returning from the Spring Festival holiday, the most common customer inquiries are about two questions: Has plants resumed operation? How does the market look?

1. Most recycling plants have not restarted and prices see partial rise

Recycling factories have started to resume work gradually since Feb 17, with some earlier on Feb 15, while the majority concentrate on resuming work around Feb 21-24, except for a few in Guangdong that will resume work later in the month. The influencing factors mainly revolve around raw materials, labor, orders, and plant maintenance.

Currently, PET flakes supply is tight. Fewer re-PSF factories have resumed work, with many factories either not quoting prices or maintaining temporarily stable prices. Only a few factories have raised prices, such as specific special white products in Jiangyin, which have seen a price increase of 200yuan/mt. Additionally, some HC re-PSF producers in Shandong, Zhejiang, Guangdong and Anhui raise the offers partially.

2. Most factories sit on the sidelines and are waiting for a turning point

Overall, raw material and product inventories are relatively low, making recycled PSF prices easy to rise than to fall. Many factories are inclined towards raising prices, but as prices of virgin PSF are close to that of recycled PSF and many plants have not restarted production, a wait-and-see attitude prevails. Particularly, with a large decline of PSF futures market on Feb 20, the upward momentum for virgin PSF factories has decreased, with some still concluding orders before the holiday. Downstream spinners have not replenished much PSF for spinning before the holiday, and those spinners that replenished have not purchased after the holiday. Spinners without purchases before the holiday are adopting a "wait-and-see" approach towards price increases. On Feb 20, virgin PSF prices have declined, lower at 7,300yuan/mt, reaching the pre-holiday level of 7,200-7,300yuan/mt. Replenishment demand may see after prices decline. The trends in Feb and Mar orders will determine future developments. If the virgin PSF market fails to stimulate recycled market, the push will have to come from recycled raw materials.

Every year, recycled PSF prices tend to decline from mid-Mar, so traders are more cautious about stocking up, some choosing to wait until mid-Mar. Factories with ample raw material show lower purchasing intentions.

In summary, many recycling factories are expected to resume work during Feb 21 and Feb 24, with a few raising prices after the holiday, while most are still observing the market. In the short term, the fundamentals of recycled market tend to rise but find it hard to fall. It is crucial to monitor the virgin polyester market and raw material prices. Expectations for mid-Mar and Apr are weak, so closely monitoring demand is key.