China's PFY exports fall obviously in April with blocked logistics

The traffic regulation was strict in some regions of China due to the spread of pandemic in Apr and the land trucking capability was insufficient. The container throughputs of some ports decreased, especially Shanghai port. PFY exports saw 2-digit reduction both on the year and on the month. According to the latest data from China customs, PFY exports totaled 235.1kt in Apr 2022, down by 14.6% m-o-m and 11.6% y-o-y respectively. PFY exports amounted to 1015.7kt in Jan-Apr, 2022, a year-on-year decrease of 13.1%.

Actually, without regard to logistics issue, PFY exports were not bad in Apr, especially from the second half of Apr. Buyers from Pakistani, Vietnam and India intensively placed orders and most of these orders will be delivered in May. Coupled with improving logistics in May compared with Apr, PFY exports are estimated to rise prominently in May.

Among major PFY varieties, exports of DTY were the best year to date while those of POY were the worst. Exports of DTY rose by 6.1% on the year in Jan-Apr, 2022, the unique variety seeing positive growth. Textured yarn export also increased by 11.8% on annual basis, which actually belonged to DTY too. However, exports of POY dived by near 50% on the year in Jan-Apr, 2022 and those of FDY dropped by more than 20%.

On one hand, it was impacted by shrinking exports to India. Exports of POY, FDY and DTY totaled 160.7kt in Jan-Apr, 2021 but were only around 39.8kt in Jan-Apr, 2022. Exports of POY to India reduced by 88.4kt or above 80% in Jan-Apr, 2022, and those of FDY slipped by 31.5kt or around 60%. On the other hand, some overseas markets like Pakistan, Bangladesh and Vietnam witnessed good orders for textiles in 2022, while these nations lacked integrated DTY, ending up with limited demand for POY but moderate demand for DTY and some FDY.

Among the top 10 export destinations in Apr, only exports to Turkey, Brazil, Mexico and US rose on the month. Turkey imported more POY from China. Brazil and Mexico mainly imported China-made DTY. US mostly imported PIY from China. Demand from Pakistan boomed in 2022. Many orders placed in H2 Apr were also from Pakistan. Pakistan may remain the biggest export destination in May.

The freight of Red Sea route surged in May as many voyages were suspended and the shipping was delayed. The freight from Ningbo port to Egypt/SOK was near US$8,200-8,300/40HQ this week, up by more than $2,000 compared with early-May, which may rise to US$9,000/40HQ due to many shipping volume. The freight from Ningbo port to Pakistan/Karachi was around US$4,800/40HQ this week, up by aroura $1,000 over early-May, which may be at US$5,000/40HQ next week. The freight to Chittagong and Jakarta also climbed up but the increment was smaller, with weekly increase near $100. 

The ocean rate of some routes may keep advancing in short run, especially Red Sea route. However, soaring freight under Red Sea route was related with human intervention and market speculation. Whether it will fare depending on the real shipment volume. Maersk and Hapag-Lloyd, the two international shipping giants, are still not optimistic about freight rates in the second half of the year.