Capacity expansion indicating outlook of direct-spun PSF in Q2

Direct-spun PSF has fallen back along with the quick decrease of polyester feedstock since Mar.

From the figure above, it can be seen that solid virgin PSF experienced the largest decline among the three products. In terms of the cash flow, all of them were compressed.

However, HC virgin PSF will bear the brunt at first from the perspective of supply and demand despite relatively healthy cash flow.

Hengyi Hi-tech’s 50kt/yr and Zhejiang Shidai’s 30kt/yr HC virgin PSF units were put into operation in Mar and they were on trial at present. They will be in normal production from Apr. Ningbo Zhuocheng and Jinzhai Xinlun plan to launch 30kt/yr HC virgin PSF units respectively in May. Besides, there are more capacity expansion plans in the second half year. HC virgin PSF market will enter traditional slack season before Aug, and hence it will face supply length at that time. As a result, it will continue to squeeze re-PSF market by compressing the cash flow. If the inventory keeps rising, some plants may cut production.

On solid virgin PSF front, there is no capacity expansion plan at present. Shandong Chenghuijin will continue to improve production line in Apr, while other plants mostly run at full capacity, so there is no large room for supply to increase. In terms of demand, downstream replenishment demand exists in Apr, which is expected higher than that in Mar, but less than Feb. Therefore, solid virgin PSF has potential to rebound in Apr, but limitedly.

As for virgin PSF for nonwoven, the sudden boom in demand which appeared last Apr is unlikely to emerge again. With cash flow compressed and lack of capacity expansion, low-melting PSF is expected to keep slightly volatile at low level. On the other hand, the demand for spunlace nonwoven has dropped obviously in Mar and the improved vaccination is also unfavorable to spunlace nonwoven market. At present, orders placed to spunlace nonwoven plants are sparse and the profit also shrinks sharply. Therefore, the demand for virgin PSF on spunlace nonwoven market will weaken in Q2 with cash flow to be compressed and spread with the one for spinning to narrow.