Direct-spun PSF processing spread under pressure from upstream and downstream

Direct-spun PSF prices fluctuate upward in mid-to-late Oct, following the higher feedstock market. In terms of the increase in futures market, PTA rose by 300yuan/mt, PSF increased by 200yuan/mt. On spot market, PTA price increase was basically the same with that of futures market, while PSF prices only moved up by 60yuan/mt. Therefore, direct-spun PSF processing spread narrowed gradually from 1,200yuan/mt to 1,100yuan/mt.

PSF plant inventory keeps reducing in Sep and Oct, and by mid-to-late Oct, the inventory has reached a year low level. Looking from this angle, PSF plants have no inventory pressure.

But downstream orders have reduced after the National Day holiday, and polyester yarn and polyester/cotton yarn inventory is hard to reduce. Currently, the product inventories have been at a medium to high level this year. With the expectation of weaker orders later, polyester yarn mills are not willing to purchase feedstock at high level.

Therefore, the current pressure on PSF plants mainly stems from the pull of different fundamentals between upstream and downstream. Amid this process, plants cannot fully pass on the raw material price increases and need to absorb part of the cost themselves.

At present, downstream yarn mills are operating normally, so rigid demand will remain stable in the later period. However, speculative demand is unlikely to emerge without positive drivers. Yarn mills currently mainly purchase feedstock on need-to-basis.