HC re-PSF witnesses a long-awaited uptick driven by positive news

Since the beginning of the year, HC re-PSF market has continued to be weak. Under the oversupply pressure, there was no good start after returning from the Chinese Lunar New Year holiday, and prices kept downward. In addition, impacted by the tariff war, the prices slumped again in Apr. After the May Day holiday, the China and United States has substantial development on trade talks. Stimulated by the favorable macro environment, HC re-PSF market welcomes the price increase, and offers continue to rise this week, up by 100-200yuan/mt overall.

Currently, the major prices of siliconized HC re-PSF in Zhejiang is at 6,200-6,400yuan/mt after-tax, 6,100-6,400yuan/mt after-tax in Jiangsu, 6,000-6,300yuan/mt pre-tax in Hebei and 5,800-6,300yuan/mt pre-tax in Guangdong. Later, putting aside macro-level factors, the downside for HC re-PSF at current prices is indeed limited.

1. HC re-PSF prices are at low levels, approaching the pandemic-era lows

After sustained declines last year and a sharp drop in the first half of this year, the overall price of HC re-PSF is around6,000yuan/mt. During recent price wars in northern regions, prices even hit as low as5,700–5,800yuan/mt after-tax, while in Guangdong, prices reached 5,500–5,600yuan/mt pre-tax, roughly comparable to the historical lows during the pandemic. Additionally, with recent surges in raw material futures, HC virgin PSF prices have rebounded to around 7,000yuan/mt, widening the price gap between HC virgin PSF and HC re-PSF. This has provided some price support for HC re-PSF.

2. Processing spread keeps down, partly to see losses

In addition, due to relatively tight supply, PET flake prices began to rise from mid-to-late Apr. Prices of cold-washed flakes have increased from a low of 3,700–3,800yuan/mt to 4,300–4,500yuan/mt currently, with an overall increase of 600–700yuan/mt. As a result, the processing spread for HC re-PSF has been continuously squeezed. The current overall processing spread is 1,200–1,400yuan/mt, while some regions have lower at 1,000–1,200yuan/mt. Based on spot purchase and production calculations, some is already in a loss-making range.

Overall, driven by positive macro news and current prices being in a historical low range, HC re-PSF prices rebound. However, as the industry is currently in the traditional slack season and factories face inventory pressure, coupled with the oversupply pattern due to continuous capacity expansion in recent years, the sustainability of the subsequent market trend may still require more positive demand-side signals from downstream sectors.