Recycled PSF: a year facing pressure from feedstock and virgin PSF markets

Due to the tight supply of feedstock and low virgin PSF price, the situation in the recycled chemical fiber market has become increasingly grim this year. This is reflected in the market with two distinct features:

First, small price fluctuations:

Under the pressure of oversupply, the recycled market in 2023 has become fiercely competitive, with demand falling short of expectations during the peak season. As a result, prices have mainly fluctuated in line with cost side, reducing the bargaining power of recycled chemical fiber plants.

Looking at the price trends of re-PSF from 2022 to 2023, the overall price fluctuation range has significantly narrowed. In 2022, the price for HC re-PSF in Zhejiang ranged from 6,850 to 7,440yuan/mt, with a fluctuation of 590 yuan/mt. However, from Jan to Oct this year, the range was 7,160 to 7,545yuan/mt, with a fluctuation of only 385yuan/mt. The price for 1.4D HTLS close virgin PSF in 2022 ranged from 6,050 to 6,930yuan/mt, with a fluctuation of 880yuan/mt, while from Jan to Oct this year, the range was 6,460 to 6,960yua/mt, with a fluctuation of only 500yuan/mt. The overall price fluctuation is low, mainly due to the strong support of the recycled cost, making it difficult for prices to fall. Besides, virgin PSF price fluctuation range also narrows this year with no large ups and downs like last year affected by the Ukraine-Russia conflict. Restrained by the virgin PSF prices, recycled PSF prices are hard to go upward.

Though there has been some moderate relief in local supply situations due to recent imports of PET flakes, overall, it remains difficult to fully open the market. It is expected that the supportive role of the recycled cost will remain strong next year.

Second, profits reduce:

In 2023, the processing spread for re-PSF remains at an extremely low level, with the cash flow generally hovering around cost line or at a loss. At some points, particularly in May and sporadic periods, due to the downward pressure on the price of PET flakes, the loss of re-PSF has narrowed somewhat. Overall, the profit in 2023 has shrunk significantly compared to 2022.

In 2024, new capacity expansion of re-PSF continues, leading to an obvious oversupply in the industry and an acceleration in restructuring. With no clear improvements expected in the supply of PET flakes, it is anticipated that recycled PSF may continue to face pressure from feedstock and virgin PSF markets.