Polyester downstream demand remains better-than-anticipated

Domestic orders gradually came to an end and the domestic seasonal business weakened since Dec. At the end of year, downstream demand is supposed to be under downtrend and the run rate of downstream plants is estimated to speed up to fall in Jan. However, it is surprised that some fabric mills reflect that their business have improved recently, mainly domestic orders.

There are two major reasons for this phenomenon: firstly, sales of winter thermal fabrics were hot after the weather turned colder in Nov, ending up with effectively falling stocks of grey fabrics. Recent weather is cold too, sales of thermal apparels remain sound. Some merchants hold expectation toward sales of apparels during the Spring Festival holiday and they place some orders of thermal fabrics. Secondly, the sea freight surged amid the Red Sea tension and tends to rise further. Some export orders need to be delivered before the end of year, so the production is very rush.

In general, the downstream demand was modest during the traditional peak season Sep-Oct while the demand in Nov-Dec and Jan is better than anticipated. Some factories and traders reflected that they have received some export orders since Dec, with some from Europe, US and Bangladesh. After the survey made by CCFGroup, some export orders were place indeed and orders of some traders could guarantee their operation until the end of first quarter in 2024, and some can only continue their operation into the end of year. It is hard to distinguish current export orders are normal and seasonal orders or the premonition of overseas replenishment by for the time being. However, we can see the export orders have shown signals to marginally improve. Based on current status, downstream plants are unlikely to put their holiday of Spring Festival ahead of schedule this year, which will return to normal level, mainly starting holiday 7-15 days before the Lunar New Year.

In addition, some twisting equipment suppliers reflect that the orders for twisting machine hike in Dec. Some domestic brand twisting machine suppliers raise their monthly production in Dec. For example, some domestic twisting supplier could only produce around 10 sets of machine previously, and its production has been raised to 30-40 sets in Dec. The orders can guarantee their production until Mar 2024 in some domestic twisting machine suppliers. Soaring orders for twisting machine in Dec is a short-term phenomenon or the signs of better demand still needs further observation later.