Direct-spun PSF: PSF spread hits a multi-year low, downstream unwilling to buy

Since Sep, though direct-spun PSF prices tick up somewhat following the continual large rise of feedstock market, but the rise is less than that of feedstock, and PSF spread continues to narrow, to be below 600yuan/mt currently, a multi-year new low.

PSF plants in Jiangsu cut more production, and operating rate of PSF once reduces to 74%. But later, as some plants restart or raise the operating rate, the operating rate recovers to 77%. Currently, a few plants in Jiangsu still plan to cut production further, while plants in Zhejiang and Fujian have no intention to cut production.

Viewed from the price trend recently, prices in Fujian are obviously higher than that in Zhejiang and Jiangsu. Prices in Zhejiang and Jiangsu are hard to rise dragged down by the lower prices of spot-future traders and traditional traders, while the situation is rare to see in Fujian, so PSF spread in Fujian is higher than that in Zhejiang and Jiangsu.

On one hand, PSF plants make effort to raise prices to enlarge the PSF spread, but on the other hand, downstream buyers mainly stand on the sidelines after prices rise. The market is at a deadlock.

For spinning mills, sales improve in Sep, and inventory reduces, but prices are hard to rise, and cash flow remains in negative territory.

However, for cotton yarn market, inventory reduces, and operating rate climbs up. Moreover, cash flow improves. Therefore, some spinners turn to produce cotton yarn instead.

In general, PSF prices remain firm under cost pressure, while downstream buyers are cautious to purchase and hold looking-on mood. The market is in a stalemate somewhat. Later, keep an eye on the macro environment and policy news.