Direct-spun PSF operating rate starts to drop

In end Nov and early Dec, some direct-spun PSF plants start to cut production or shut down, and operating rate drops to below 80%. The production cut and operation suspension before the Chinese Lunar New Year holiday has started.

In 2022, operating rate of direct-spun PSF is generally low, below 90% overall. There are two rounds of intensive production cut and operation suspension in the first half year and second half year respectively. The operating rate in the first half year once reduced to below 60%. In the first eleven months of 2022, operating rate was averaged at 77.3%, down 11.5% from 88.8% of the same period of last year.

The low operating rate this year is mainly triggered by the weak demand, oversupplied situation and frequent low PSF spread.

In 2022, PSF spread shivers around 1,000yuan/mt, and in some periods, it reduced to below 700yuan/mt. In Jan-Nov, 2022, PSF spread averaged at 1,002yuan/mt, down 147yuan/mt from the same period of last year.

In Dec, demand remains lackluster, and yarn inventory keeps high, so spinners mainly purchase feedstock for pressing demand. PSF plant inventory continues to pile up. Some traders sell at low level. Spinners hold heavy looking-on mood. With gradual increasing inventory, other PSF plants will release the maintenance plan successively for Chinese Lunar New Year holiday around mid-to-late Dec. With the relaxation of COVID control measures, how about the recovery of demand will be observed. PSF plants shall control the inventory and keep low inventory to have the holiday.