Direct-spun PSF: operating rate recovers gradually this week

More direct-spun PSF plants cut production in June and July as downstream demand is gradually into slack season and there is processing spread and inventory pressures. The direct-spun PSF operating rate has reduced from 95% to below 90%.

This is one of the few periods this year, apart from the Spring Festival, when the operating rate has dropped below 90%. The last time the operating rate fell below 90% was in April, when factories also took joint actions to reduce production.

However, starting from this week, some of the previously shut-down plants will gradually resume operations. As a result, the operating rate will rise above 90% again, but it will not recover to the 95% level until September. For August, it is currently expected to stay at 90%-95%.

Despite the increase in the operating rate, the downstream market remains sluggish. Yarn mills are operating at their lowest rate this year, with inventories remaining high.

Recent market rumors suggest that petrochemical and chemical facilities operating for over 20 years will be subject to phase-out or technical upgrading requirements. To date, only Shandong has released relevant documents, with no such policies in other regions. In the PSF sector, capacity from equipment installed in 2005 or earlier totals approximately 3-3.5 million tons-accounting for one-third of current direct-spun PSF capacity-though some of these facilities have undergone upgrades over time. Most of this capacity is concentrated in Jiangsu, the traditional hub of direct-spun PSF production. At present, it remains unclear whether and how this policy will be implemented in other regions. As the policy landscape unfolds, the near-term impact on direct-spun PSF operating rates is expected to be limited, pending further policy developments.