HC re-PSF: prices weak and inventory hard to reduce

HC re-PSF market has remained weak since Sep. Upstream raw material prices have been in a continuous decline, while downstream demand has failed to pick up as expected during the traditional peak season. Recently, producers have successively lowered their quotations, and the trading prices has slipped-with Nantong becoming a price depression. Currently, the transaction price of siliconizedHC re-PSF in northern China has dropped to 5,800–5,900yuan/mt; in Zhejiang, it ranges from 6,000–6,200yuan/mt; and in Guangdong, the price is relatively low, at around 5,500yuan/mt pre-tax. Overall, the price of HC re-PSF has fallen back to the lowest price range of the year.

The production and sales data of HC re-PSF fell significantly in Sep compared with Aug. The monthly sales ratio of some plants is only 70%-90% by now. Only a few plants managed to reach or exceed 100% after pushing sales with low prices at the end of the month. As a result, regarding inventory data, after a brief decline in Aug, inventory has accumulated in Sep. Currently, the average inventory in Zhejiang has approached the high level, partly to one and half month or even above two months.

Additionally, the current processing fee for HC re-PSF remains at a low range of around 1,000–1,300yuan/mt, with cash flow continuing to hover at the break-even point or in a slight loss. Production and sales fail to meet expectations during the September peak season, and with the upcoming 8-day Mid-Autumn Festival & National Day holiday approaching, post-holiday inventory pressure will further increase. As a result, some manufacturers in Guangdong and Zhejiang have recently begun to cut or suspend production, leading to a gradual decline in operating rates. If there is no significant improvement in downstream demand going forward, it cannot be ruled out that more plants will cut or suspend production.