Polyester filament yarn price may inch down in short run

Price of polyester filament yarn kept rising for 2 months since late-Nov, 2020. Taking POY150D/48F as an example, price of it has increased by 1,300yuan/mt or 26% from 5,000yuan/mt to 6,300yuan/mt since late-Nov.

In the first month of increase, PFY price was mainly driven by downstream orders and ascending cost. Downstream buyers were active in chasing up and replenishing. In the second month, downstream buyers were forced to restock for speculation with mounting feedstock cost but modest new orders. Price increase of PFY lacked strong momentum. Only new orders for fabric for home textiles were tolerable.

Actually, stocks of PFY were low now but price of PFY lacked upside stimulus. Recent increase was mainly driven by rising feedstock as downstream procurement has apparently weakened. Sales of PFY have been lackluster for a period and price of PFY showed signals to head south. Actual trading price of Lianda and Tongkun was discounted by 100yuan/mt and other plants may successively cut price for promotion in later period. Price of PFY is expected to inch down in short run.

Sales and orders of fabric mills have apparently diminished recently. On one hand, the pre-holiday orders have come to tail-in stage; on the other hand, most post-holiday orders were in deadlock due to price issue. Fabric mills were reluctant to offtake under losses while fabric traders were unwilling to place orders under high price. Operating rate of downstream fabric mills started descending obviously since last week as many non-local workers started returning to home for the Spring Festival holiday in advance, worrying the pandemic to affect their schedule. The run rate of downstream plants may reduce by 20% every week in the following 3 weeks. Almost all downstream mills will suspend production by the first weekend in Feb. Around 5% of fabric mills do not intend to have holiday based on our survey, and around 10-15% of twisting units will not have holiday for this Spring Festival holiday.

As for the replenishment for the post-year production, 70-80% of downstream mills expect PFY price to reduce later or think current price to be high, adopting looking-on mindset and not restock for production after holiday now. Only a small proportion of players start building up stocks for post-holiday production. If feedstock price declines moderately, downstream players may increase replenishing for the production after Spring Festival holiday and sales of PFY are likely to hike periodically.