Operating rate reduction for HC virgin PSF plants

The hotter the weather, the weaker the hollow fiber market. In July, temperatures have soared above 35°C, yet demand for hollow fibers hit the bottom. Since late June, costs have surged due to the Israel-Iran conflict, pushing HC virgin PSF prices up to the 7,100-7,700yuan/mt range. But after the ceasefire took effect, prices corrected sharply. HC virgin PSF prices followed lower gradually, dropping to 6,900-7,400yuan/mt currently, with an overall decline of 200-400yuan/mt.

The trend of low-priced HC virgin PSF squeezing out HC re-PSF has lost its effect this year. At the start of the year, the price gap between the two was only around 100yuan/mt, but it has gradually widened to around 1,000yuan/mt now. If such a large gap persists, HC re-PSF may instead start to replace HC virgin PSF later on.

Currently, HC virgin PSF cash flow is relatively tolerable, so some producers provide discounts to sell, but with lack of orders, downstream buyers' purchasing willingness remains low. Therefore, HC virgin PSF inventory keeps accumulating recently. From mid-July, more plants cut production, and till now, the operating rate has reduced to below 60%, to the lowest after the Chinese Lunar New Year holiday.

Looking at downstream conditions, the home textile market in Dieshiqiao has been less vibrant this year compared to the same period last year, with sales in June-July weakening further from May.

HC virgin PSF market is in a slack season. Even with low-price promotions, downstream willingness to purchase remains weak, making it a wise move for factories to curtail production and control inventories.