Direct-spun PSF lacks luster in May

Direct-spun PSF stepped into narrow range-bound gradually after experiencing the prosperity before and after May Day holiday. In the week before May Day, bolstered by the rise of polyester feedstock and PSF futures, direct-spun PSF price rallied gradually from low where the downstream spinners procured PSF intensively. After May Day holiday, with the sales improving, the price of direct-spun PSF moved up further. However, downstream buyers became reluctant then and the sales ratio started to decline. In early to mid-May, PSF futures slumped, and the transactions by the way of basis showed obvious advantages, pressuring the sales of direct-spun PSF plants. Later on, direct-spun PSF price moved into volatile downtrend within narrow range alongside the ups and downs of polyester feedstock and PSF futures during the period, but the downstream spinners showed modest buying interest with previous stocks at hand.

As a result, the inventory of direct-spun PSF plants started to accumulate. It kept negative in most of the time before May Day holiday, but then rushed up from minus 0.8 day to current 4.3 days. In fact, the actual product inventory in the warehouses of direct-spun PSF plants has risen to high level at 21.3 days. To deal with that, many plants started to cut production. For example, Yizheng Chemical fiber, Jinlun and Huvis (Sichuan) all arranged maintenance or production cut during May. By the end of May, the operating rate of direct-spun PSF plants has moved down to about 93% from the high of about 97%.

On the other hand, downstream blended polyester yarn has been sold smoothly since Apr with great profit, promoting some spinners to shift production from pure polyester yarn and TC-type one to CVC-type one which contains less PSF than the former, leading to a decrease in demand for PSF. However, compared with the decrease in rigid demand, the speculative demand decreased more obviously.

Therefore, even if the production cut has been adopted to cope with the surplus pressure and the stocks are also in downward momentum with expectation to weaker demand in May, the supply is still in length compared with the demand.