Polyester industrial yarn market review in 2023

Price fluctuated less and the yearly price declined on the year

In 2023, price of PIY fluctuated basically in line with the cost side and curved an "M"-shape trend, with apparently smaller fluctuating range over previous years. Taking PIY ordinary high-tenacity 1000D/192F as an example, according to the data from CCFGroup, the highest and lowest price was at 9600yuan/mt and 8250yuan/mt respectively in 2023, and the yearly price was at 8826yuan/mt in 2023, a year-on-year reduction of 845yuan/mt or 8.7%.

Capacity expanded greatly

By the end of 2022, capacity of PIY reached 2.90 million tons/year in China. Many new PIY units started operation in 2023. New capacity was expected to be at 440kt/year in 2023, including 200kt/year from Hengli's Phase III plant, 200kt/year from its Phase IV unit and 40kt/year from Kingsway's Phase II plant. The capacity of some small unit was eliminated due to long-term shut down, covering 50kt/year. Therefore, the effective capacity of PIY is estimated to be 3.29 million tons by the end of 2023, with growth rate at 13.4%, apparently rising over 2022. New capacity mainly came from Hengli in 2023. After capacity expansion, Hengli's PIY capacity has been increased to the top one in China, which ranked the second place in 2022.

Production ascended but the growth was smaller than that of capacity

PIY production obviously rose in 2023. On one hand, there were many new PIY capacity in 2023, leading to apparently higher production; on the other hand, the run rate of PIY plants was not affected again with the opening of pandemic prevention and control in 2023, especially in the first half of year. In expectation of growing demand, the run rate of PIY plants in 2023 increased on the year. Thus, the production of PIY was estimated to rise by 150kt or 8.1% on the year in 2023. The increment and growth rate of production were both smaller than that of capacity in 2023, which was because the new capacity was at 440kt/year in 2023 but these three units did not all start production at the beginning of year, which was put into production in Feb, Mar and Sep respectively. In addition, after new units commissioned operation, most did not run at full capacity and the actual release of production was not complete. Thus, the growth rate of production was smaller than that of capacity.

Processing spread was squeezed further and conventional varieties were still under losses

In 2023, the production and capacity of PIY both apparently increased, while the growth of downstream demand was smaller. Domestic market faced fierce competition and export slightly decreased after EU raised the anti-dumping tariff. Therefore, the competition on PIY market escalated. The processing spread of PIY was narrowed on the year and conventional PIY goods saw heavy losses. Taking ordinary high-tenacity 1000D as an example, the processing spread of chip-spun ones was mainly at 1500-2500yuan/mt in 2023, above 2000yuan/mt in Jan-May and Sep and below 2000yuan/mt after Jun and lower than 1800yuan/mt in Nov-Dec. The processing cost is under 2500yuan/mt for reference. As for the yearly processing spread, it was at 2003yuan/mt in  2023, down by 405yuan/mt on annual basis, with bigger losses.

In summary, the prices of PIY mainly fluctuated around the cost side in 2023 and the supply glut became intensified after capacity and production substantially increased. As a result, the processing spread was squeezed further and conventional products kept suffering losses.