Direct-spun PSF: waiting for replenishment after price declines

Since mid-to-late Dec, direct-spun PSF prices fluctuate upward promoted by costs, but the purchases from downstream spinners reduced correspondingly. The periodical purchases for once a week were changed to purchases on need-to-basis, and sales ratio kept low, leading to higher inventory.

In terms of PSF price, the price is not high currently, even looking from the price range of whole year, the level is relatively low. But from the angle of downstream market, currently, polyester yarn faces losses at present, which could not accept the feedstock price well. In 2023, the cash flow of polyester yarn has been negative during the most time.

Besides, looking from the yarn inventory, though the polyester yarn inventory reduces somewhat in Dec, it remains high overall. As the orders are not expected to improve further, spinners are not willing to replenish feedstock. Recently, some spinners reflect that works will return home from mid-Jan, and operating rate of yarn mills will drop further.

Moreover, basis of direct-spun PSF keeps weakening, and prices under fixed level maintain low. Spinners are not worried about the supply of feedstock. Ultimately, it is the issue of excessive capacity.

Recently, direct-spun PSF prices go downward again with lower crude oil and polyester feedstock prices. Market attention rises and some buyers intend to purchase before Spring Festival holiday. If the prices drop to 7,000-7,200yuan/mt, downstream buyers will increase the purchasing volumes again periodically.