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Market review of recycled market in 2022

2022-12-20 07:50:43 CCFGroup

Time	Keynote
Jan	Recycled plants started the Spring Festival holiday late. A good start after the holiday was anticipated due to tight feedstock, lower inventory, limited replenishment of downstream spinners and views on high oil prices first.
Feb	The Beijing 2022 Olympic Winter Games officially opened on Feb 4, 2022, and Bing Dwen Dwen, the cute panda mascot, continued to be a smash hit; HC virgin PSF and low-melting PSF was oversupplied and prices slipped; Oil prices surged with the outbreak of Russia-Ukraine conflict on Feb 24.
Mar	Oil prices soared, and recycled chemical fiber prices followed up, but the rise was smaller than virgin chemical fiber, so price spread between virgin and recycled chemical fiber enlarged. But downstream spinners could not accept the high level. From mid-Mar, re-PSF prices fell down and sales were thin. With the multiple outbreaks of epidemic in late Mar, some plants cut production or suspended operation.
Apr	The epidemic continued to impact the market. HC re-PSF demand was soft and prices were hard to rise. Plants curtailed production and suspended operation intensively in Apr and May.
May	After the May Day holiday, epidemic emerged in Jiangyin, and transportation was difficult. Virgin PSF offers ticked up mostly. Price spread between virgin PSF and close virgin PSF enlarged to 2,000yuan/mt. It was heard that demand of virgin PSF returned to re-PSF, which was favorable for quality HTLS close virgin PSF, while conventional medium-grade re-PSF and close virgin PSF sales were ordinary. HC re-PSF market was mild.
Jun	Re-PSF market moved up first and then fell down following the trend of PX market. The downward space was limited with the support of feedstock. HC re-PSF market suffered large-scale losses in Jun.
Jul	With the expectation of economic recession, oil prices slipped sharply in Jul. Re-PSF prices followed lower, and sales turned thinner, leading to accumulating inventory.
Aug	Recycled plants cut production and suspended operation intensively again impacted by power rationing, high temperature and weak market situation.
Sep	In early Sep, the sharp rise of PX pushed up recycled PSF offers, while HC re-PSF prices were hard to rise in Guangdong; Recycled market faced two difficulties: feedstock supply was tight in winter; downstream demand was sluggish and market confidence lacked.
Oct	The market was steady from Oct 1-3, but during the late period of National Day holiday, oil prices ticked up stimulated by production cut agreement and polyester product prices all increased. Later, demand turned weaker and prices moved lower. Buoyant season was not favorable.
Nov	PET flakes supply reduced with lower temperature and recycled chemical fiber plants faced tight feedstock, lower virgin PSF prices and possible depreciation of inventory; Plant operation was affected in Hebei by the epidemic.
Dec	Plants originally planned to start Spring Festival holiday earlier this year due to weak demand and tight feedstock supply. But with the relaxation of COVID control measures, plants planned to delay the holiday time.

In 2022, recycled chemical fiber prices fluctuated limitedly. Close virgin PSF and HC re-PSF in Zhejiang moved up and then declined for three times in the range of 6,000-7,000yuan/mt and 6,800-7,500yuan/mt respectively. Under the background of global economic recession expectation and weak Chinese demand, oversupplied situation was obvious, and recycled chemical fiber price moved up mainly driven by costs or macro environment, so the rise was limited and time could not last long. In addition, impacted by high temperature, power rationing, weak demand, tight feedstock supply and epidemic, plants have shut down and curtailed production intensively. Many new units plan to be put into operation in 2023. In 2023, with the continual capacity expansion, oversupply may be more obvious.

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