Influence of India's second wave on polyester fiber within China

The pandemic has intensified in India since Apr. Daily new infections rapidly climbed up, staying around 300,000 recently. Some orders were rumored to be transferred to China from India since last week, arousing much concern.

Firstly, from the perspective of polyester fiber market size in India, according to the statistics from Japan Chemical Fibers Association, PFY and PSF production in India approached 3,325kt and 1,239kt respectively in 2018. Based on the data collected by Everbright Securities from DCPC, PFY and PSF output scored at 2,520kt and 1,030kt respectively in 2019. Not much change was seen in recent 2 years. Therefore, current production of PFY and PSF was estimated at around 3,000kt and 1,000kt respectively.

China is a major PFY supplier in Southeast Asia and even in the world. Exports of PFY amounted to 2,710kt in 2020 in China, and India accounted for 4% of the total, approaching 116kt. Exports of PFY to India totaled 60kt in 2019, occupying around 2% of the total. That meant India was basically self-sufficient in PFY, with limited import volume.

The pandemic has affected the delivery of PFY to India reflected by some exporters within China. In terms of product structure, among PFY exported to India in 2020, the proportion of POY was as high as 70%, followed by polyester industrial yarn at 20%, and the rest was DTY and FDY.

In 2019, India imported 30kt of POY from China, accounting for 51%, and the proportion of PIY was at 41%, with volume at 25kt. Imports of China-made PIY stabilized at around 25kt in recent 2 years in India, while those of POY surged apparently, which would be related to the capacity expansion on downstream DTY market.

As for the transfer of orders, players on polyester downstream market did not see much order improvement based on the market survey made by CCFGroup. It may be because the sampling enterprises were too limited or may be because order transfer tended to be a market expectation. Export was impaired in 2020 within China, and players held high anticipation toward the performance in 2021. Export of polyester fibers managed to improve in Jan-Apr, 2021, particularly PFY. However, the momentum for demand still mainly came from domestic market. China, as the biggest exporter of textiles and apparels in the world, witnessed modest export year to date. It would be hard for India to see good export too. It was even less clear for the so-called order transfer. China enjoys relatively prominent advantage in polyester sector. The situation of cotton textile market was left out here.

The impact of the pandemic maintains. In the latest news, Turkey has announced a national wide blockade, and curfew started in some regions of Thailand. The situation is still undergoing, and order transfer may not be ruled out in the future. Demand in these countries has suffered a heavy setback. Some market participants may consider it will be a substitution, while as an economic community, no one can perform well independently after overall demand weakened. It is still worthy of consideration and attention.