Direct-spun PSF faces further inventory accumulation pressure in Jun

In Jan-May, 2024, direct-spun PSF market operation has been relatively flat. Except the large production cut and shutdowns during the Spring Festival holiday, operating rate of direct-spun PSF is largely under normal operation in the rest time.

The operating rate was averaged at 76.6% in the first quarter of 2024, a fall of 0.7% from the same period of last year. In the second quarter, the operating rate is supposed to be more flat compared to last year.

In Apr-May, 2023, direct-spun PSF spread narrowed to 500-600yuan/mt, so plants shut down or cut production gradually. In 2024, direct-spun PSF spread has improved, and inventory is at medium to low level. Therefore, operating rate is going up after Apr. In Jun, there is no shutdown or production cut plans, and there is new capacity to be into operation. Therefore, operating rate may reach the year high in Jun.

So PSF supply may increase obviously in the second quarter compared to last year, up about 300kt or 16.7%.

In May, direct-spun PSF inventory has piled up slightly. In Jun, downstream market gradually enters into slack season, and orders may drop further. Though yarn inventory is not high, spinners may show less buying interests to purchase feedstock, and cannot accept the high prices of feedstock. PSF supply is likely to reach high level in Jun. Therefore, direct-spun PSF may be oversupplied again in Jun, and inventory is likely to accumulate further.