Polyester downstream buyers active in restocking, approaching craziness

With less than 20 days left until the Spring Festival (Feb 10), the textile industry chain is still busy. Fabric merchants are busy taking orders, fabric mills have long queues, and dyeing factories are rushing to meet deadlines. The atmosphere is not only far from being dull, but even shows signs of good performance. Some companies are trying to shorten their holiday as much as possible. All indicators are good, excluding profitability.

At the same time, the downstream buyers started stocking up for the production before Spring Festival over the weekend, and this trend has become more and more intense this week, even approaching "craziness".

As the polyester polymerization rate is estimated to be high during the Spring Festival holiday and supply reduces unexpectedly, the price of major polyester feedstock is firm recently. As of Jan 23, the polymerization cost has risen to nearly 6,600yuan/mt. Recently, with the continuous increase in the price of polyester raw materials, some downstream plants and traders have been forced to restock for the production after holiday.

Since last weekend, PFY companies have received more large orders and implemented a one-on-one negotiation model for large-volume orders. According to statistics from CCFGroup, sales of PFY have continued surging for consecutive four days. Downstream buyers start replenishing for post-holiday production completely.

In terms of the intensity of stocking up, first of all, traders have stocked up a large quantity, and there are even quite a few orders in the tens of thousands of tons range. Some large chemical fiber enterprises have stopped receiving orders from traders to reduce the impact of potential selling-off and market price disruptions in case the future market weakens. Secondly, some downstream plants have stocked up for a month or even longer. Some downstream enterprises believe that in the context of large-scale destocking and significant short positions by chemical fiber companies, prices may remain firm until the end of Mar after the Spring Festival holiday. Therefore, they have all stocked up until the end of Mar. If the normal production will resume on the Lantern Festival on February 25, about 35 days of inventory is required. Based on the current atmosphere and intensity of stocking up in the downstream industry, it is inferior to the nationwide stocking up during the Spring Festival in 2021, but clearly surpasses the Spring Festival periods of 2022 and 2023.

In short term, the replenishment in the downstream industry before the Spring Festival has not yet ended and will continue later.

Overall, the atmosphere in the polyester and downstream markets before the Chinese New Year is good. The main reason is not because the actual downstream business is booming (only some areas, especially printing and dyeing factories, are doing well), but because the current orders for spring and summer products are still acceptable, and considering that the fiber prices are not very high compared to the whole year of 2023, the market has a good expectation for the post-holiday period and a mentality of not wanting to miss out, resulting in an easy-to-rise and difficult-to-fall situation in the entire polyester industry chain's prices before holiday. However, the trend of the market after the holiday will depend on the extent to which these expectations are realized.