Why cannot direct-spun PSF find active buyers?

The cash flow of direct-spun PSF has stepped to the negative side since mid-Jul, and it gets worse increasingly. Weighed by the losses, many plants intend to cut production. Some plants even raise prices quickly in order to reverse the situation, but some still focus on selling, leading to large gap between the high and low on the market. Downstream players are reluctant to accept the high prices.

In terms of direct-spun PSF plants, some of them have started to reduce production or have planned production cut due to the huge losses, so that the operating rate recently has declined to year’s second lowest (just higher than that during 2021 Spring Festival). If the production cut is implemented as scheduled, the operating rate will decrease to below 85%, marking a new low in the year of 2021.

From the perspective of polyester yarn mills, the price of polyester yarn is hard to move up, so the mills less accept the high-priced raw materials. Downstream fabric mills also face losses, and they procure polyester yarn mostly for rigid demand. Thus, polyester yarn mills mainly focus on digesting the stocks of raw material rather than chasing the high prices.

In addition, product inventory in polyester yarn mills is not high and some of them are still delivering previous orders. They stay in a comfortable territory at present under the balanced or slightly tight market pattern. Therefore, even if the expectation to the peak season exists, it is safer for polyester yarn mills to lock raw materials based on orders.