PSF supply tightness eased: better or tougher in Jun?

Direct-spun PSF supply tightened suddenly in early May due to the outbreak of the pandemic in Jiangyin, followed by quick rise of price, widened spread and fast reduction of inventory.

Later on, some PSF plants restarted successively, and by mid-May, the operating rate of direct-spun PSF improved by about 9% points from the lowest, despite still year’s low level.

Besides, the restriction on logistics in Jiangyin was also eased, and direct-spun PSF supply increased gradually. Then PSF spread got compressed and the basis also started to weaken.

Recently, direct-spun PSF mainly moved along with polyester feedstock. Polyester yarn market has not seen much improvement yet. Since the beginning of 2022, cotton yarn production has been partly shifted into polyester/cotton yarn, and polyester/cotton yarn partly into polyester yarn, but the soft end-user demand could not make the excessive polyester yarn and polyester/cotton yarn digested. As a result, the profits of polyester yarn and polyester/cotton yarn were contracted to breakeven line or even to negative side.

At present, direct-spun PSF price stays at high level and downstream spinners mostly purchased for rigid demand. In Jun, direct-spun PSF supply is expected to increase further as PSF plants in Jiangyin restart after the lockdown and Xinfengming will start up 300kt/yr direct-spun PSF unit in end-May. However, the recovery of the demand is largely uncertain. Thus, direct-spun PSF supply is likely to recover more quickly than the demand and PSF plants are suggested to continue the proper control of run rates.