Direct-spun PSF waiting for clear direction in rangebound

Direct-spun PSF has been volatile within 6,700-7,100yuan/mt since Dec. The market was mild with procurement driven by rigid demand.

From perspective of market fundamentals, direct-spun PSF now stays in a period of quantitative change.

Inventory: direct-spun PSF experienced a wave of dip buying in late Nov, reducing the inventory largely. In Dec, the inventory increased limitedly as operating rate remained only around 80% despite slightly accumulation.

Operating rate: In Dec and thereafter, only Xianglu and Xinfengming plans to respectively restart a 160kt/yr direct-spun PSF unit and a 100mt/d production line. So the operating rate will hardly exceed 85%. In Jan, some plants will start to cut or suspend production for Spring Festival. Especially HC virgin PSF and low-melting PSF, their cash flow hovered around breakeven line under high pressure of sales. These plants will cut and suspend production early than the plants with PSF for spinning.

Cash flow: direct-spun PSF has not seen much pressure of inventory since Dec and its price stays firm, so the cash flow kept moderate, which is also benefited from low operating rate.

Downstream: polyester/cotton yarn remained soft and the inventory stayed in accumulation. The inventory of polyester yarn was reduced largely, spurred by export sales, but the continuity remains to be observed. At present, the profits of all polyester-contained yarn are compressed to year’s low, and the mills focus on selling now.

In conclusion, PSF market and polyester yarn market are not highly burdened, but polyester feedstock side do not provide favors temporarily, so direct-spun PSF will keep rangebound and the market participants may decide where to head when production plans during Spring Festival holiday are confirmed and cleared.