PFY: Optimistic in profit of FDY &integrated project

New PFY capacity is expected to be scarce in 2024. New units under plan include Tongkun Jiatong CP7, Xinfengming Xintuo and Rongsheng Shengyuan, with capacity totaled 1160kt/year. In addition, 30kt/year textile chip-spun fiber and direct-spun small polymerization experimental unit is scheduled to be put into production. Therefore, the total new PFY capacity is estimated to be 1190kt/year in 2024, with growth rate near 2%.

Meanwhile, Lianda's 180kt/year direct-spun PFY unit suspended production from Sep 16, 2023 and Yijing's 750kt/year polymerization unit, including 650kt/year of direct-spun PFY capacity, halted production from Dec 10, 2023. In addition, another 480kt/year of direct-spun PFY units (200kt/year+80kt/year+200kt/year) are anticipated to be offline for long. That means around 1310kt/year of direct-spun PFY capacity is scheduled to be suspended in 2024, exceeding the capacity expansion.

Therefore, PFY market is primarily in a state of stock competition in 2024. Under stock competition, both demand and production are expected to maintain positive growth. As a result, the cash flow of PFY may further improve in 2024, with FDY profit anticipated to be better than POY.

Among the textile filament, the proportion of FDY capacity gradually declines year by year, which fell to around 30% in 2023 from 40% in 2015. The consumption proportion of polyester FDY and DTY is not fixed every year, but supply and demand of FDY has been better than that of POY since 2022 in terms of inventory and profit. New textile FDY capacity is limited in 2024 and the yearly cash flow of FDY150D is anticipated to be around 300yuan/mt or above, higher than the estimated value of POY.

In addition, under stock competition, the profit of PFY plants in PTA-PFY integrated industrial park may be relatively better, covering Tongkun Jiatong, Jiaxing Petrochemical and Xinfengming Dushan Energy, with advantages in lower energy consumption amid intensive energy supply and lower transportation and package cost of PTA.