How long will direct-spun PSF continue the robust momentum?

Direct-spun PSF has sustained the uptrend after National Day holiday with an increase of 700-800yuan/mt, reaching year’s high but triggering market’s concerns.

Traders more prefer to sell out after the price moves up to 8,000yuan/mt and turn cautious to stock up. Holding 20-40 days of raw materials inventory, some higher two months, spinners get reluctant to procure at current high price unless they have the rigid demand or plan to lock orders.

Such being the case, will direct-spun PSF stop rising and fall back later?

Looking from the previous increase, it is mainly driven by crude oil and the impacts of dual control on energy consumption. The shortage of international energy supply could not be eased at present, which will lend strong support from cost side. In terms of the direct raw material, PTA will see recovery of operating rate recently. Honggang’s 2 million tons/yr and Yisheng’s 6 million tons/yr PTA units are in resumption, which will push the operating rate up to 72% from 12%. From polyester side, Tongkun and Xinfengming will further cut or suspend PFY production and the operating rate of polyester will decline 2% to less than 80%. Therefore, PTA will face inventory accumulation in Oct and may weaken slightly. As for direct-spun PSF, affected by the dual control on energy consumption, many plants which cut or suspended production have not confirmed when to restart, so the operating rate will stay low, providing robust support for the price of direct-spun PSF. The processing spread also shows uptrend.

On the other hand, downstream polyester yarn has experienced much more increase than direct-spun PSF after National Day holiday and the cash flow is in expansion. Even if polyester yarn is scarcely traded later on, the mills are able to accept the high-priced raw materials.

Besides, high inventory will be hard to appear for direct-spun PSF in Oct from the supply and demand performance.

In conclusion, direct-spun PSF market is facing periodical digestion and acceptance of the sharp rise now. If crude oil does not fall back largely, direct-spun PSF will keep robust, yet with slower growth.