Polyester industrial yarn kicks off rising price but lacks transactions

Impacted by increasing prices of crude oil and PX during the Spring Festival holiday, prices of polyester feedstock and major polyester products saw a good start after holiday. On the first working day after holiday on Feb 18, price of PET fiber chip increased by 100yuan/mt over the last working day before holiday on Feb 8 and kept rising on Feb 19. Price of PIY rose slightly later, which was stable on Feb 18-19 but moved up to lower losses after PET fiber chip price climbed up. Domestic offers of ordinary high-tenacity 3000D were around 8800yuan/mt, by cash ex-works. Quotations of low-shrinkage 1000D and activated adhesive 3000D were at 9300yuan/mt, 3-mon by acceptance, ex-works. HMLS1000D was offered at 11500yuan/mt, by cash ex-works. Minor discounts were available in actual transactions. The overall prices of PIY rose by 300-500yuan/mt compared with pre-holiday level.

In late-Jan, prices of PIY were revised up to lower losses when price of PET fiber chip increased. Offers of ordinary high-tenacity 3000D were at 8500yuan/mt but prices decreased and trading was concluded under earlier low price 8200-8300yuan/mt in end-Jan due to unsmooth sales in some companies. However, price of PET fiber chip was firm. Therefore, the processing spread of PIY was narrowed to historic low, lower than 1300yuan/mt for ordinary high-tenacity ones. PIY plants saw heavy losses. Under such circumstance, PIY companies were eager to adjust up price to reduce deficit when prices of PET fiber chip advanced after Spring Festival holiday. However, transactions were lacked after price moved up. On one hand, price of PIY rose a lot but downstream market failed to chase up; on the other hand, many downstream buyers have restocked PIY before Spring Festival holiday and focused on digesting PIY prepared before after holiday. That meant demand for PIY presented feeble. In addition, price of PET fiber chip also inched down due to falling cost and weak supply and demand after moved up for a short period. PIY inventory has apparently piled up before and after Spring Festival holiday, ending up bearish mindset on downstream sector. Most buyers were cautious in restocking. Currently, price of PIY was largely firm but decreased slightly in some companies.

Prices of PIY are expected to reduce further later with contradiction between supply and demand but may be hard to pre-holiday low level in short run due to the cost issue. After all, PIY plants have suffered heavy losses and ongoing losses will force companies to take some measures to curb price from falling. Meanwhile, rigid demand for PIY is likely to gradually improve later after PIY inventory of downstream plants gradually being digested, which will slightly support PIY price.