PFY market witnesses accumulating contradiction with faster downstream production cuts

Last week, the operating rate of DTY plants and fabric mills has accelerated falling according to the survey made by CCFGroup. Operating rate of DTY plants dropped to 69%in Zhejiang and Jiangsu now, around 70% in Changxing, at 80-90% in Xiaoshan and Shaoxing, near 60-70% in Cixi, below 60% in Taicang and below 70% in Changshu. Operating rate of fabric mills decreased to 62% in Zhejiang and Jiangsu: around 70% for water-jet mills in Wujiang, near 60% in North Jiangsu and around 70% in Changxing; the run rate of warp knitting plants was below 80% in Haining and at 40-50% in Changshu. The run rate of circular knitting plants was below 50% in Xiaoshan and Shaoxing from Zhejiang and near 40% in Changshu from Jiangsu. The operating rate of DTY plants and fabric mills reduced by 6 percentage points and 5 percentage points respectively during last week.

At the beginning of this week, some DTY plants reflected that the reduction of run rate has not stopped and has been sped up. According to the feedback, the operating rate of DTY plants was near 30-50% in Taicang, at 40-50% in Changxing, at 60-70% in Changshu and at 60-70% in small plants in Xiaoshan and Shaoxing. The comprehensive operating rate was still above 80% as large DTY plants still ran at high capacity. The run rate in Cixi was near 60-70% and the comprehensive run rate may decrease to near 60%. Many downstream customers think the performance during this off-season is slacker. The operating rate of downstream plants in July 2025 may be close to that in 2022, low compared with the same period of recent years.hr_wordimg_1751937751435_33482.png

Although some factories have reported that production reduction is affected by high-temperature weather. By the end of June and early-July, the Jiangsu-Zhejiang region has entered a period of high temperatures, with daily maximum temperatures exceeding 35 degrees Celsius, significantly worsening the production environment for texturing, some water-jet weaving, and circular knitting processes. However, the fundamental reason for the low operating rate lies in blocked demand.

The inventory of PFY has been medium-to-low in recent years, but that of grey fabrics has been the highest level since last week and is increasing.

In contrast to the usual practice in the PFY sector of boosting sales volume by lowering prices, the sales of grey fabric are generally more seasonal, and its price sensitivity is lower than that of filament. From a seasonal perspective, grey fabric market may start seeing falling inventory in the second half of the year around mid-August at the earliest, or as late as early-September. If fabric mills maintain a high operating rate, the comprehensive inventory of grey fabric could quickly exceed the 40-day pressure threshold; currently, due to sluggish sales, grey fabric factories will not be highly motivated to keep their machines running at high rates.

Compared with rapidly weaker operating rate on downstream market, the operating rate of PFY plants remains high, with that of direct-spun PFY plants above 90%. The contradiction between supply and demand is accumulating.

As for inventory, PFY plants do not face too large inventory burden. The inventory of POY and FDY has been above 22 days, higher above one month in some companies, and is mounting. The heat temperature impairs the reservation of PFY to a certain extent.

In terms of the profitability, PFY plants are strongly eager to sell with inventory burden and the rapidly cut price. The processing spread of PFY is shrinking. By now, the fine denier POY is near the cost line, and coarse ones see minor profit, and FDY is unprofitable on the whole.