Polyester downstream: pre-holiday speculation and post-holiday production resumption need concerning

The operating rate of DTY plants, fabric mills and printing and dyeing plants extended lower in recent weeks when the attendance rate of workers was seriously insufficient after more workers were infected by COVID-19.

Operating rate of DTY plants declined to 28% in Zhejiang and Jiangsu: around 40% in Xiaoshan and Shaoxing, near 30% in Changshu and Cixi, near 20-30% in Taicang and at 10-20% in Changxing. Operating rate of fabric mills fell to 26% in Zhejiang and Jiangsu: around 30% for water-jet mills in Wujiang, below 30% for water-jet mills in Changxing, around 30% for warp knitting plants in Haining, around 10% for warp knitting plants in Changshu, below 200% for circular knitting plants in Shaoxing and below 10% for circular knitting mills in Changshu, and around 40-30-40% for water-jet plants in North Jiangsu. Operating rate of dyeing plants dropped to 38% in Zhejiang and Jiangsu: around 20% for plants in Xiaoshan and Shaoxing, near 50% in Wujiang and Changxing, around 40% in North Jiangsu, 30-40% in Changshu and at 60-70% in Haining.

The run rate of fabric mills has been lower than 30%. Most factories have started Spring Festival holiday now, which is around 26 days before the Lunar New Year, the earliest in history. The holiday schedule of 2021 and 2022 was earlier than the previous years too, but was near 16-17 days before the Lunar New Year.

The resumption of production after Spring Festival holiday is not optimistic temporarily. On one hand, post-holiday orders do not appear temporarily, especially export orders. Most factories do not have post holiday orders now. On the other hand, the spread of pandemic is likely to be repeated after holiday due to the population mobility before the Lunar New Year's holiday. The attendance rate of workers after holiday is worrying just like before holiday. According to the survey made by CCFGroup, most factories will resume operation after the Lantern Festival (Feb 5). Therefore, most fabric mills will restart operation at above 50%, 20 days after the Lunar New Year’s holiday, namely near mid-Feb.

 DTY plants, fabric mills and printing and dyeing plants are busy in tail-in work now. The dyeing plants have stopped feeding and most will suspend production between Jan 5-10. Almost all small DTY plants and DTY plants will suspend production near the New Year's Day holiday.

After the production stopped, downstream plants will concentrate on recouping capital but some meet difficulty as the financial staff is infected by COVID-19. Most capital recouping will be intensive near Jan 10. After the payment is collected, some downstream plants may increase purchasing PFY for the production after Spring Festival holiday.

The PFY stocks of downstream plants are diversified due to different capital levels. By now, the stocks of PFY can mainly guarantee production for more than one month after Spring Festival holiday in some factories. However, some plants have not restocked temporarily.

PFY stocks of downstream plants was mainly around 25 days before and after the Spring Festival holiday in 2018-2022. Downstream plants show moderate buying interest in restocking PFY now, and some may increase purchase PFY to 25 days after capital being recouped. By  that time, the inventory of direct-spun PFY plants may reduce to below 10 days. Once the workers resume from the COVID-19, the operating rate of direct-spun PFY plants may have upward space.