Polyester filament market perceives more negative feedback

Sales of fabrics are unsmooth recently with falling seasonal demand. Many fabric mills reflect that new orders have weakened and the inventory burden is increasing. The operating rate of printing and dyeing plants drops the most. By now, operating rate of dyeing plants slipped by 6 percentage points on the week to 76% in Zhejiang and Jiangsu: above 80% in Wujiang, 70-80% in Xiaoshan and Shaoxing, around 70% in Changshu, around 50% in Haining, and around 60-70% in Changxing and near 90% North Jiangsu.

Fabric mills face pressure from orders and sales. On one hand, some plants cut price for promotion. Some grey fabrics are sold under losses but the effect is not good. Meanwhile, as the collection of payment is slow, some fabric mills have faced capital pressure. The operating rate of fabric mills slightly declined by one percentage point to 79% in Zhejiang and Jiangsu and that of plants in Fujian fell by 6 percentage points to 47% by Nov 9.

The run rate of fabric mills in Changshu and Fujian decreases the most. By Nov 9, the operating rate was below 80% for water-jet mills in Wujiang, around 90% in Changxing, above 80% in North Jiangsu; the run rate of warp knitting plants was above 90% in Haining and below 80% in Changshu; the operating rate of circular knitting plants was more than 50% in Xiaoshan and Shaoxing and below 40% in Changshu. The run rate of circular knitting plants fell by more than 10 percentage points to 30-40% in Quanzhou, Fujian, that of warp knitting mills declined by 20 percentage points to 50-60% in Changle, that of lace knitting mills was still around 30%, that of circular knitting mills decreased to 5% to near 30%, that of warp knitting plants was still at 70-80% in Chaozhou and Shantou and sustained at 50-60% for rapier mills in Guangzhou.

Small DTY plants do not face too big inventory pressure now and most still run at high capacity. Operating rate of DTY plants sustained at 89% in Zhejiang and Jiangsu by Nov 9: around 100% in Changshu and Taicang, below 90% in Xiaoshan and Shaoxing, below 80% in Cixi, and around 90% in Changxing.

With weaker sales, the run rate of downstream plants slips and most become more cautious in restocking. Compared with last week, the PFY stocks of downstream plants reduce.  By now, the stocks of PFY can mainly guarantee production for 1-2 weeks, longer into end-Nov.

PFY plants are in dilemma now under high operating rate. On one hand, downstream market is weakening and the inventory of PFY has been transferred to upstream market from downstream sector. PFY producers witness mounting inventory. On the other hand, feedstock market is firm and PFY plants have suffered losses. PFY plants may not willing to discount price for promotion much.

With mounting inventory, PFY producers may face the problems of inventory burden and the alternative between profit and operating rate.