PFY: downstream procurement hard to improve much in Apr

Operating rate of twisting plants remained at 95%, and that of fabric mills was at 89% now. Both could be regarded as yearly high. That meant rigid demand for PFY would be tolerable theoretically.

However, PFY stocks prepared by downstream players remained abundant. PFY at hand could guarantee production for 10-20 days in many downstream mills, longer for 1 month. Therefore, rigid demand for PFY is expected to be constrained by current high stocks in Apr. Stocks of grey fabric also accumulated amid limited new orders and high run rate.

As for speculative demand, it may be hard to improve dramatically amid high cash flow of PFY. Prices of PFY are likely to face downward risk due to higher inventory burden. Stocks of polyester feedstock market decreased, but overall market was restricted by some other factors including the outflow of registered PTA warehouse receipts and the later startup of new MEG units.

If polyester feedstock price does not rise much in Apr. Downstream buyers are still expected to focus on digesting PFY purchased before and mainly purchase to cover the pressing demand.

Demand outside China is still expected to recover in long run. It is not suggested to hold too much anticipation toward export orders in the first half of 2021 within China. Stocks of apparels for autumn and winter are high now, and the pandemic intensifies in some regions outside China. Some orders return to Southeast Asian market. Many players in downstream and middle stream have hoarded up abundant feedstock. That means the peak-season anticipation in Apr may be discounted.

PFY makers may face pressure in May if new orders on downstream market are plain in Apr. That means some polyester plants may scale down production from late-May to Jun, so may downstream fabric mills.