Recycled market: price spread between virgin PSF and re-PSF may keep low after holiday

Recycled plants are closed for Spring Festival holiday successively, and many plants plan to resume operation around Feb 1 and Feb 5. Nevertheless, recycled feedstock supply remains tight after the holiday, and price spread between virgin and recycled products is likely to maintain low.

According to CCFGroup, polymerization costs are about 6,100yuan/mt on Jan 13, hot washed blue and white flake prices are at 5,950yuan/mt, and recycled chemical fibers have no obvious price edge.

Currently, end-user plants set off for holiday successively and market transactions are bleak. PTA and MEG faces inventory accumulating pressure in Jan-Feb, and polyester costs have no big support. Virgin PSF plants run at a high level of 70-80%. Some plants have no plan to shut for holiday, and inventory pressure will pile up gradually. In Jan, underselling is possible to see. After the holiday, demand is expected to be positive somewhat in Feb-Mar.

Cleaning plants shut down gradually and PET flakes supply is limited. Recycled chemical fiber plants are hard to procure, and feedstock inventory is generally low. Besides, feedstock supply is supposed to remain tight after the holiday, supportive to recycled chemical fiber market. Recycled chemical fiber prices may be easy to rise but hard to slip. On Jan 13, HTLS close virgin PSF price was 6,620yuan/mt and virgin PSF price was 7,110yuan/mt, with the price spread of below 500yuan/mt. HC virgin PSF price was 7,640yuan/mt and HC re-PSF price in Zhejiang was 7,340yuan/mt, with a price spread of about 300yuan/mt. The price spread was relatively low.

Therefore, recycled chemical fiber plants get support from firm feedstock market, but for virgin chemical fibers, feedstock support is weak and supply faces pressure, so price spread between virgin PSF and re-PSF may remain low. Pay attention to the orders after the holiday.