Upstream strong, downstream weak: direct-spun PSF processing spread hits an annual low

After the May Day holiday, polyester feedstock prices fluctuated upward, and PSF futures market was active to follow up, but for spot PSF market, the price increase was obviously lower than that of futures market, leading to the processing spread continued to narrow to below 1,000yuan/mt, to reach a new low in the year of 2025.

Currently, for direct-spun PSF market, upstream market is strong, but downstream market is weak.

From the prospective of the feedstock market, after the May Day holiday, the Sino-U.S. tariff issue is developing in a positive direction and PTA operating rate drops to around 70%, while polyester polymerization rate continues to increase, leading to a tight PTA supply and demand situation. There is a strong atmosphere of price increases in the feedstock market.

However, the downstream market situation is not satisfactory. During the May Day holiday, some yarn mills suspended production for holiday, with the vacation period ranging from 1 to 2 days at the shortest and 4 to 7 days at the longest. Currently, the operating rate of polyester yarn has not yet recovered to the level before the holiday. Moreover, the orders remain weak, and yarn inventory keeps accumulating. At present, except for sewing threads, which have no inventory or even shortages, the inventory of ordinary ring-spun and vortex-spun polyester yarn is generally high, usually reaching more than one month.

Therefore, downstream spinners cannot accept the price increase of PSF. PSF plants and traders mainly focus on selling, so PSF inventory pressure is not large in May, but its processing spread continues to be squeezed. Later, it is quite difficult to improve the processing spread by relying on the price increase of PSF itself. It is more likely to achieve under the impact of feedstock market.