China's PFY exports reduce as expected in July but to advance obviously in August

China's PFY exports reduced in Jul as expected. Players held looking-on mindset in the first half of month when the extension of BIS certification was not announced. In the second half of Jul, many orders from India were placed, while actual delivery was limited. Therefore, market participants focused on the delivery of export orders in Aug. The delivery tempo is slightly delayed in PFY companies in Aug, while the delivery volume is large. After the shipment to India increased, the freight of Indian and Pakistani route gradually firmed up. PFY exports are likely to hit yearly high in Aug.

According to the latest data from China customs, PFY exports amounted to 305kt in Jul 2023, down by 34kt or 10% on the month. Among this, exports to India fell to 12kt, down by 31kt or 71.5% month on month, almost meaning the whole reduction of PFY exports.

China's exports of POY and FDY reduced by 24kt and 10kt respectively in Jul over Jun, and those of POY and FDY to India fell by 18kt and 9kt respectively. Exports of DTY were moderate, more reflecting actual demand.

As for the export destinations, India, Brazil and Egypt should be greatly concerned in Jul. The Indian market has been analyzed many times before, and it is suggested to highly note Brazil and Egypt this time.

Brazil's growth in Jul was largely related to its anti-dumping policy. According to its anti-dumping final decision issued last year, anti-dumping duties would be imposed on August 22, 2023, so some customers replenished goods in advance in Jul, but last week it was learned that Brazil's anti-dumping measures have been postponed again, and the subsequent impact on the market is expected to be small.

Egypt's big decline in Jul was mainly due to payment problems. According to its national statistical agency, the country's overall inflation rate reached 38.2% in Jul, another all-time high. In order to curb the inflation wave, Egypt's central bank has raised interest rates by a total of 1100 basis points in the past 17 months, and Egypt's payment problems are likely to be repeated before the situation is alleviated.

Remark: the freight of different ships and forwarders differs, and the above freight is only for reference.

The freight rate of Indian and Pakistani route was firm this week and that of other routes changed little. The freight from Ningbo to Pakistan/Karachi increased to US$950/40HQ in actual sales, which may be above $1000, and the offers were at US$1100-1200/40HQ. The freight from Ningbo to Egypt/SOK was at US$1400-1500/40HQ, down by $600-700 over peak in early-Jul, that to Indonesia/Jakarta was at US$350/40HQ and that to Brazil/NAV was around US$2500/40HQ.

After export volume rose in Aug, PFY exports are likely to reduce in Sep-Oct and there are uncertainty in Nov-Dec. On one hand, the BIS certification of India has uncertainty. If it is extended again, players are still expected to restock in advance but the volume may be limited. On the other hand, overseas customers need to replenish at the end of year. PFY exports are supposed to rise in Nov-Dec by convention. The total PFY exports are estimated to grow by 18% on annual basis to around 3.9 million tons throughout 2023.