Direct-spun PSF spread expands with improved demand

Entering Aug, direct-spun PSF spread has been constantly expanding, from 800-900yuan/mt in end Jul to be slightly above 1,000yuan/mt currently, reaching a year high.

The higher direct-spun PSF spread is mainly driven by the improved downstream demand.

For the polyester yarn sales in Aug, though its prices follow up slowly, sales see obvious improvement, and inventory reduces. The expectations on the "peak season" seems to come.

Another demand is from the replenishment from traders. In early Aug, direct-spun PSF futures moved lower, and spot-futures traders and traditional traders sold with large quantity at lower level, leading to large reduction of products held by them. In mid-month, direct-spun PSF futures rebounded, and as spot PSF prices followed up slowly, traders generally replenished direct-spun PSF. But this demand was released periodically, and only provided a boost to the market.

In addition to the improved demand, the larger direct-spun PSF spread was also affected by the weak PTA market.

Since Aug, PTA processing spread narrows gradually, and currently, it has been negative value. But PTA plant production cut is limited, and operating rate keeps at around 80%. Polyester operating rate tends to reduce since mid-to-late Jul. Some polyester plants may be affected by the 19^th Asian Games in Sep, then PTA market may face inventory accumulation pressure.

The situation for direct-spun PSF is quietly changing, with weakening costs and improving demand. The comfortable direct-spun PSF spread is expected to sustain.