HC re-PSF prices keep downward amid sluggish demand

The hollow fiber market has remained sluggish this year. Despite a brief rebound in May and June-spurred by tariff benefits and the Israel and Iran conflict, which halted the downward trend temporarily-downstream demand stays weak, with new orders scarce. HC virgin PSF prices have been edging lower steadily, while the HC re-PSF price has seen a steep, sustained drop since July. Currently, prices HC re-PSF in Zhejiang have fallen to 5,900-6,000yuan/mt, and in Guangdong, prices have hit a low of 5,500-5,600yuan/mt. Overall prices have breached April's lows, marking a new yearly trough.

The price spread between HC virgin PSF and HC re-PSF has enlarged to around 1,000yuan/mt, but even under such condition, HC re-PSF market is still hard to improve. Recently, plant sales ratio stays at 30-60%, and inventory keeps accumulating. In Zhejiang, product inventory in some plants have been above one month, or even higher to 2-3 months. The average inventory has been near one month.

Sluggish sales have exacerbated inventory pressures. As prices keep declining, processing fees for HC re-PSF have continued to shrink recently. The overall processing spread now stands around 1,300yuan/mt, with some regions seeing even lower of 1,000-1,100yuan/mt. For those purchasing raw materials on a spot basis for immediate production, operations have already fallen into the loss zone.

Therefore, more plants shut down or curtail production recently. In the first half month of Jul, a few plants in Jiangsu and Guangdong shut down for 7-10 days. The operating rate reduces successively overall. Later, if demand sees no obvious improvement, plant inventory will continue to accumulate, it cannot be ruled out that the scope of production cuts or shutdowns will expand further.