Recycled PSF market remains lackluster despite larger virgin-recycled PSF price gap

Currently, the price spread between virgin PSF and recycled PSF has enlarged to 800-900yuan/mt, to be a high level this year. But recycled PSF market remains weak, mainly dragged down by the downstream demand.

In terms of the downstream market situation, after destocking in August and September, polyester yarn performance is now diverging. Among them, vortex-spun yarn is selling well, but ring-spun yarn is generally mediocre, with inventory remaining above one month. Feedback on the downstream market of HC re-PSF is also generally lukewarm. According to the Dieshiqiao Home Textile Index, the purchasing index typically declines continuously in the fourth quarter, and it is expected to continue its downward trend after October. Currently, manufacturers lack confidence in the market outlook, and some factories are hoping for an improvement after the weather turns cold. This year, summer in southern China lasted exceptionally long. Now, autumn in Hangzhou is as hot as summer.

The cost gap between virgin and recycled PSF is gradually narrowing. According to the CCFGroup, the polymerization cost stood at 5,181yuan/mt on October 13, while the price of hot-washed blue and white bottle flakes was 4,800yuan/mt, leaving a gap of 381yuan/mt between the two. As temperatures drop, the difficulty of recycling bottle increases, providing rigid support for their prices. In contrast, the outlook for virgin PSF is bearish: amid oversupplied crude oil, oil prices are still on a weak downward trend, and may face greater oversupply pressure in Q4. Additionally, with continued new capacity additions for virgin PSF, market expectations have turned weaker, and the current processing spread of 1,264yuan/mt has room to decline. As a result, the cost gap between virgin and recycled PSF may narrow further. Therefore, the "contrarian" rising prices of bottle bales during the National Day holiday have declined in recent days, and recycled PSF lacks momentum to rise, with more transactions conducted through preferential negotiations.

In general, although the price spread between virgin PSF and recycled PSF enlarges, the recycled PSF market is mild.